We’ve all heard the scary numbers regarding baby boomer retirements; Some 96M boomers to retire in the next 10 or so years, with only 46M Millennials behind them to fill in the gap.
It’s easy to say (and many people have) that this demographic shift will create severe problems for businesses of all sizes. Finding enough talent to simply get the work out the door will be difficult. While this overall shortage of workers is bad enough, I believe the bigger issue lies is in the upcoming shortage of leadership, as its’ only logical to conclude with an overall shortage, there will also be a shortage of qualified leaders.
Most people accept that a business will only go as far as its’ leadership will take them. I’ll take this a step further and state that in my opinion, leaders and leadership teams are the single most important factor in the success (or failure) of any business. And, while top level leaders (CEO, President, Vice Presidents) certainly play the most critical role, leadership at all levels is critical for success.
Those companies who are best at recruiting, developing and retaining high quality leaders will be successful and others will not. One could say this has always been true in business, and I believe it has been. However, the stakes have now become much, much higher. No longer will companies with poor or even sub-par leadership be able to continue on as “also rans”. There will absolutely be some sort of contraction in total number of businesses out there; There will simply not be enough employees (even mediocre ones) to go around.
So what can you if you as a business owner or CEO to ensure you are one of the winners of this war?
- Critically evaluate your current leadership team. Do you really have A players in place in all functional areas of the business, or does the business rely too heavily on yourself or just a couple key individuals? If gaps exist, work hard to identify people in the business who can be developed, or recruit from the outside now vs. later. As time goes by, it will become tougher and tougher to lure away good leaders from their current companies.
Get serious about retention. Start investing time and dollars in those strong leaders and high potentials and stop investing time in the poor ones. That’s right, STOP investing time in the poor ones. In every business I’ve ever encountered there are people that will simply never get on the bus. Oftentimes they’ve been problems for years but have never been dealt with. You know who they are, be honest with yourself. The best people quickly recognize when poor behaviors in their peers is not being addressed. And believe me, they will leave you for this reason. Unfortunately, the bad ones don’t often leave on their own because they have few options out there. The good ones have many, many options, so they’ll much sooner.
Of course, retention is about much more than dealing with poor performers, but resist the temptation to address it mainly with money. Just paying your best performers better than your poor ones does not fix the problem. The best people want to achieve and accomplish big things, they can’t do that with laggers on the team.
Get serious about development. Very few companies I have worked with are truly serious about developing leaders for the future. Most have great intentions and pay it eloquent lip service; “We have to commit to developing leaders” or “We plan to commit” but the great majority never really get it done. I get it; the pressures of running a business and meeting the day to day needs of customers are enormous and its’ easy to put leadership development somewhere down the list of priorities. However, given the perfect storm brewing over the next few years, leadership development simply has to become paramount; Hiring it from the outside when you need it will be really tough and really expensive.
- Stop taking the DIY approach. At the risk of sounding self-serving, I am going to state loudly that you should not, and cannot, do everything yourself when it comes to talent/leadership. I don’t know one business owner who would consider trying to be his/her company’s own tax accountant, business attorney or banker. Yet, I see many, many companies who believe they can recruit, develop and retain the best talent all on their own. Even companies with very sophisticated HR departments periodically need assistance in these areas. In fact, the best HR professionals understand that an outside source can oftentimes be more effective than an inside one.
Granted, the best search firms, industrial psychologists, executive coaching/development or HR Consulting firms are not cheap. However, if you choose the right partners, these investments will pay off in millions not thousands. Just as you would when evaluating a CPA or Banker, ask these partners to explain the ROI they will provide to your business and make sure they can clearly describe the services they will provide and have a track record of backing it up. The good ones have no problem with this; They are business consultants like anyone else.
As I mentioned, the best companies have always been those that focus on leadership. However, the stakes will soon be higher than ever before. If you are not paying attention and doing something about it, it may not be the case of having a few down years; It very well may be the end of your business.