Introduction

For the first time in world history, skilled labor is a seller's market. A new employment paradigm has emerged that will drive business success in the 21^st Century. Within this new model, businesses must understand and actively adapt to the perspective of the individual, which requires an employment environment that is heavily oriented toward the personal success of each employee. If businesses do not adapt this these changes, they will find themselves critically short of "human capital," with effects equally devastating to being short of financial capital.

We live in a knowledge-driven economy. A company is only as good as its people. However, human capital (knowledge and skills) is an asset that can be possessed only by individuals, not corporate entities. This asset has very unique characteristics. For example, it walks out the door every day, carrying all corporate secrets with it, and it does not have to come back.

Corporate arrogance, once able to command high premiums from employees, is today a recipe for failure. Individuals now hold a valuable, open-ended option to change employers. They now manage their own careers, and they know it. Employers who recognize this shift, and who act accordingly, will succeed relative to any competitors who fail to grasp this new environment.

If you are looking for the next corporate David beats Goliath story, pay attention to the small companies that have adapted to the new human-capital driven economy. Many will overcome vastly stronger, yet less adaptive, competitors over the next decade as workforce shortages become more severe and human capital becomes more precious than money.

The World has Changed

The war for finding talent is over, and the winner is the talent[i]. Employers now realize that if they do not satisfy their employees with generous compensation, perks and training, there are plenty of other employers who will.

The changing environment can be explained by two inescapable trends that have converged to create the new employment paradigm (NEP). These trends are:

• Information Technology

• Workforce Demographics

The convergence, or rather, the collision of these trends provides the force behind the NEP.

Information Technology

The relentless pace of information technology (IT) has reduced geographic barriers and propelled the global economy into a period of long-term continuous growth and job creation. In this way, IT caused the world to have an insatiable appetite for more workers.

IT has also spawned the era of the knowledge worker, whose value to an organization is largely based on what he or she knows and can do with that knowledge. Lifelong learning is now a firm requirement for most careers. Employees require significant initial education, as well as continuous training and robust information access to do their jobs. As a result, the U.S. higher education industry now represents a $225 billion market that will grow by 14 percent over the next 10 years, and the U.S. corporate training industry is a $62.5 billion dollar market that is currently growing at 10 percent per year[ii].

Workforce Demographics

Simply put, there are not enough skilled workers to go around. The Electronic Recruiting Index of 1999 predicted a modest shortage of 2.3 million workers in the American economy as of January 1, 2000[iii]. Broken down further, the gap between the participating U.S. labor force and the number of jobs is projected to exceed 5 million workers during 2000, representing about 5 percent of the workforce. Unfortunately, however, this gap will expand to more than 15 million more jobs than people in the U.S. by 2015 [iv].

Individual Versus Corporate Perspective

All truly successful businesses achieve success based on their ability to understand and appreciate the perspective of their customer, and to formulate their product or service accordingly. The same rules apply in the 21^st century labor market.

The lack of this perspective is evident in many corporate and e-recruiting Web sites. For example, consider the very first line from a leading corporation in the petroleum industry, under the title, "What XXX Offers You:"

"XXX is the world's leading petroleum and petrochemical company - global, entrepreneurial and growing."

Now compare this statement with the following, from another company in the same industry on an equivalent Web page:

"At YYY, we know our success depends on the energy and creativity of our people."

See the difference in perspective? Of course, there are plenty of other ways a corporation can fail to demonstrate an understanding of the individual's perspective. Who was it that said, "What you are speaks so loudly that I cannot hear what you are saying?" What is the motto from the most dominant e-recruiting site?

"Life, Work, Possibilities"

What perspective does this statement reflect? Notice that there is absolutely no indication that the entity making this statement is a company. Consider another publicly held company in the e-recruiting industry:

"This is the way to work"

Good, but a step down. A company talking across a divide to you, the jobseeker, could have made this statement. It makes you question whose side the speaker is on, yours or "theirs." Now consider this snippet from the center of the home page of a major company in the staffing industry:

"...is connected to thousands of jobs at great companies in almost every major city. Whether it is temporary or full-time, clerical, industrial, or technical, XYZ offers the jobs and the organizational solutions to perfectly match the expectations of candidates and companies."

What does this statement mean to a jobseeker? There is no doubt who made this statement-a company. Now ask yourself, which of these above entities are you most likely to trust?

Beyond marketing bylines, the perspective communicated by a company can have serious consequences. Companies must consider how easy it is to betray their true viewpoint in every policy decision, benefit offering, and communication to their staff. Are the individuals treated like responsible adults or like children? It is assumed that the individual wants to do the right thing, or that they will take advantage of the system.

What does this mean for the Employers?

Due largely to workforce demographics, human capital is emerging as a corporation's most precious asset. However, this critical commodity has some interesting characteristics:

As a result, human capital cannot be managed using the methods applied to other physical assets such as natural resources, money, or equipment. Much greater care is necessary in virtually every action or inaction, since all moves will be critically evaluated on a "should I stay or go" basis by each knowledge worker, potentially yielding results far from the intended outcome.

Many companies are in tune with this new game. For example, companies like Goldman Sachs, McKinsey, PricewaterhouseCoopers, Andersen Consulting and Citigroup, who never had a problem with hiring and retaining the best candidates, are abandoning previous recruiting and retention methods to give employees what they really want.

However, relatively few companies currently "get it," and those that do not, risk losing their competitive industry positions. Just as an understanding of e-commerce enabled nonplayers to surpass the giants in their industries, an understanding of the new principles of human capital management will help weaker players overtake stronger and more capitalized competitors.

It's All About Them

Each individual has his or her own personal success measure. A success measure can include the following: Appreciation, investment in continual education, challenging roles and responsibilities, recognition, or generous compensation rewards. While each success measure is different, there is one commonality: "What will make me feel personally successful?" Until recently, very few employees exercised this center-focused trait. Historically, employees had put their success measures on hold, to achieve company driven measures, thinking that their personal success specifications would be met in concert with the company's success. Today, employees have shifted this mentality to realize that if they succeed, the company will succeed. The shift in mentality is because a happy employee is a happy worker; if an employee is happy, he or she will be more inclined to stay with the company and to work towards the company's desired goals and objectives. Employers must see this shift in culture, not as a trend, but as a new employment industry standard, and act accordingly.

Recent studies have shown that employers are modifying their policies to accommodate the shift in the employment industry. To retain workers, traditional companies are offering more benefits, short-term and long-term bonuses for employees, and stock options. For some employees who have already achieved professional recognition in a previous job, they tend to seek companies that excite and challenge their abilities. These modifications are just the beginning and will continue to evolve as the employment industry evolves.

Some employers are waking up to the reasons why employees are being pushed from one company and pulled to another (push and pull theory), while others still struggle to understand the high turnover figures. For employers who have begun to get a handle on why employees are leaving, they are making inroads to increasing employee retention and satisfaction. For those employers who are missing the boat, what is the ticket to recruitment and retention?

It's All About ME!

According to Tony Lee, editor-in-chief of Careers.wsj.com, the guiding principle between employee retention and a company is "all about relationships"[v]. The knowledge worker needs to feel appreciated, invested in, challenged and/or compensated. For the organization, goals and objectives include profitability, productivity, efficiency, and quality service. The knowledge worker and organization determine the level of satisfaction against their respective success measurements. To achieve optimal satisfaction for both entities, the relationship must be synergistic. Below is an illustration of the relationship that must exist if the relationship is to be synergistic.

Success Measures

People want to be personally successful. Each of them has a unique formula for personal success, which complicates things for employers. The challenge is to be perceived as the best possible vehicle for personal success by each employee. Much of this perception will stem from the alignment between the goals and values of the organization with the individual, as well as the strategy employed to reach the corporation's objectives. Today the "whole" company is evaluated by the "whole" person. If the company is trustworthy on all counts, and if the promises made during the hiring process were sincere, retention is attained.

Knowledge in the 21^st Century

Knowledge in the 20^th century was regarded as an asset that could be controlled by employers. However, in the 21^st century, employers are seeing a shift in how knowledge is controlled. Knowledge, embodied in the minds of employees, has a free will of its own; it cannot be contained or placed within barriers because it plays by different rules. The rules have changed because individuals are aware of their self worth and are taking more responsibility for their own careers. This self-worth realization is attributed to how they perceive their knowledge and the associated value. Therefore, knowledge is demanding and powerful, and while some employers are aware of this new phenomenon, some employers are still unaware that they are not in control.

Employers retain their employees by understanding that knowledge and skills are the key aspect of the 21^st century. Employers do not pay for people; they pay for knowledge and skills. However, they have no ownership of either of these traits. Thinking strategically, in terms of employee retention, is not just realizing that the employees want more money, more perks, more responsibility or title. These are only a lure. Individuals in the 21^st century want to manage, maintain, develop, and represent their knowledge and skills effectively. Since these two traits are an individual's true indication of potential and self worth, they hold their knowledge and skills to be something that needs to constantly grow and be appreciated. Understanding how to manage, maintain, develop, and represent a person's knowledge and skills are what will make a person stay.

Illustrated below is the Professional Development Cycle. Within the cycle an individual may be looking to select new skills, develop existing skills, represent skills through a certification program, or match current skills to the appropriate job. The interesting thing is that a single person may be working on several of these goals at the same time. Thus, in seeking an employer, he or she is likely to evaluate that employer's ability to accomplish each of the key activities.

Professional Development Cycle

It is therefore critical for employers to understand and structure an environment that addresses each of the above activities. The same holds for e-recruiting Web sites and staffing agencies. If an individual had a system that would help him or her select new skills, develop current or new skills, represent current skills, and match skills to his or her job of choice, knowledge might remain in one place.

According to The Forrester Report, individuals are dissatisfied with job boards, which will eventually "evolve into career networks" or professional development systems[vi]. The report highlights that individuals want a place to choose which skills to profile or represent. The report defines a career network as one solution for providing a one-stop shop for professional development. This one-stop professional development site would "aggregate multiple career services for consumers (and recruiters) to serve both in an ongoing relationship." The professional development database would also serve "as a marketplace for human capital that aggregates job posting sites and connects to a recruiter desktop" (matching skills), profile personal information (represent current skills), provide "assessment and training tools" (select new skills and develop new skills), and ensure "privacy throughout the process".

A system that encompasses a full professional development cycle would indeed solve much of the criticism of today's employment market. The professional development system would help enhance and maintain productivity. It would provide continuous opportunities and enable rotation of job responsibilities that would eliminate job boredom. Continuous professional development would also mean individuals would constantly reap the rewards of equitable and fair pay as well as satisfy positive reinforcement. It may even persuade someone to remain in one company, rather than become another example of the "push and pull" theory.

Conclusion

Employment is today a seller's market. To succeed, corporations must adapt their practices in radical rather than incremental steps. Those who do not adjust will quickly find themselves "human capital poor" and hence vulnerable to competitors who acted more proactively.

Put more simply, if a company does not adopt a near obsession with the personal success of its staff, it will experience great difficulty competing in the 21^st Century.

Endnotes