Buyer’s Market

Most of us have experience the joy of finding a “bargain” or a better price than expected on a good or service that we desire. Causal conversation, office stories, social media, as well as reality TV all include stories of diligent and savvy shoppers who use their wits, technology, and negotiating skills to find and make an incredible deal. While there may be a variety of reasons for why we feel we have gained the “upper hand” as a buyer, the key element in the availability of deals is simple supply and demand or the gap between how much of something that is available compared to how much it is desired.

When we speak of a “buyer’s market,” we are describing a purchasing environment where the buyer has some type of advantage over the seller that benefits the buyer. For example, when there are more units of a product then what is desired by consumers, then the price of the product tends to fall. Conversely, when one refers to a “seller’s market,” there is less of the product than what is desired by consumers and consumers compete with each other for the limited availability of the desired product.
Labor markets respond to supply and demand shortages in a similar fashion where some periods favor employers, while other times favor candidates. When there is excess demand and limited supply of labor, the price increases and employers have to compete with each other for talent. Similarly, when there is excess supply of labor and slower demand, employers have the upper hand and have a multitude of choices to acquiring new labor with less resources.

Based on the current level of unemployment and economic growth, potential employees occupy a more influential position. As employers deal with increased levels of competition for labor, talent acquisition strategy becomes more important. In other words, how a firm positions itself in the labor market and the effectiveness of its actions determine how successful it will be at attracting the best talent possible. Various factors influence the success of an organization’s strategy, but this post will focus on one of the roots of strategy formulation: perception.

What an employer thinks of its own organization plays a key role in how an employer positions itself vis-à-vis its peers, enacts its talent acquisition strategy, and interacts with potential employees. Put simply, if an organization thinks it has an advantage with candidates and it does not, then it will more than likely adopt the wrong strategy. Organizations, like most of us tend of have a slightly “rosier” view of its actions, image, and strengths.Figure 1: Comparison of Employer and Candidate Perceptions

In order to demonstrate the differences in perception between employer and candidates, the results of a recent survey of 20 employers and 500 candidates in the southeast within the service industry appear in Figure 1. The survey asked candidates to rate their perceptions of the employer’s image as well as posed the same questions to the employer’s hiring managers. All five questions differ between employer and candidate with the largest differentials pertaining to commitment to social and environmental support, total rewards, and work environment. A variety of factors create differences in perception and this small sample is not sufficient to draw strong conclusions. Nevertheless, some areas for consideration include:

• measurable and regularly reported information tends to have more alignment between candidate and employer perceptions;
• social media affords candidates more insight into workplace environment;
• candidate ideas on what is fair and equitable may be different from the employer’s perceptions; and
• social and environmental initiatives may require more than communication as candidates look for ways to not only join an employer with a commitment to supporting the community, but also desire to actively participate in the process.

Some important things to keep in mind based on these results include the following:

• employers have to define who they are to the labor market or someone or something else will;
• positive characteristics should be communicated through a variety of media; and
• intangible characteristics may require more communication.

Managing Expectation Gaps

Most of us deal with managing expectations or our belief of what will occur in the future on a regular, if not daily basis.  While expectations come in different sizes or orders of magnitude, they all possess the capability of impacting our feelings, attitude, and interaction with others.  For example, think about how our expectations regarding regular things, such as traffic on our commute, friendliness of a cashier, interaction with our spouse, behavior of our children, or even flavor of a meal can impact our moods, if our expectations are not met.  The heart of the issue with even these simple examples is the gap between the expected and actual outcome.   In essence, the expectation gap encompasses those situations when reality does not meet our desires.

In the workplace, a wide expectation gap not only impacts morale, but also leads to lower levels of productivity and staff turnover. How does this happen? In the simplest sense, as the gap widens employees feel more disappoint and anger. As the anger increases, an employee may stop performing his or her work and begin interfering with others.  While some employee expectations may be unrealistic or addressing their desires may be impossible, a successful manager will ensure that he or she has a good understanding each employee’s expectations and assists in managing those expectations.  

So, how strong are we as managers at assessing expectations? In order to gain a basic snapshot of the alignment between employee expectations and manager perceptions, the result of a recent survey of 500 employees at three levels (support, professional, and manager) in ten customer-focused organizations will be utilized to further our discussion.  The data was collected through an ARG study that inquired regarding employee expectations for the following categories: nature of work duties, workplace environment, supervisor’s leadership capability, fairness of advancement, and rewards.

Figure 1 summarizes the indexed results of employee expectations for all categories, manager perceptions of employee expectations, actual level of realized expectations, and gap between employee expectations and actual level realized.   Overall, the survey indicates that:

  • support staff possess the highest expectations compared to professionals and managers;
  • managers perceptions of expectations align the closest with employee expectations at higher levels in the organization (professionals and managers);
  • managers of managers perceive higher expectations than those expectations actually present among their direct reports;
  • support employees have the largest expectation gap; and
  • professionals and managers realize outcomes closer to their expectation than support staff.
Figure 1: Comparison of Employee Expectations and Manager Perceptions

While by no means are these findings definitive, they provide a basic outline of where expectation gaps may arise in organizations.  If support staff tend to have higher expectations related to work environment, leadership, and advancement as well as have less of their expectations met, managers need to make sure that frequent, honest, and transparent communication establishes a realistic level of employee expectations.   Similarly, if managers of managers have a better idea of the expectations of their direct reports, there may be a training or mentoring opportunity for less experienced managers.   Finally, expectations can change very quickly with the level of connections present within social media.  Getting to know your workforce and their expectations at all levels is not a “once and done” process, but an on-going journey.

Employer Branding

A common question in today’s market is “How can I hire the right people when I need them in such a competitive market?” While some organizations have household name recognition or limitless compensation resources, most of us have limited market presence and resources.  This does not mean we are not great places to work or fail to offer a superior work environment or opportunities, it is just we are not known to potential candidates.  In order to counteract the “hidden gem” problem, a growing number of organizations are turning to employer branding.

What is employer branding? In the simplest sense, it is the application of the marketing concepts and tools utilized to gain customers to attract and hire potential employees.  An employer’s brand is the perception that current, past, and potential employees have regarding what it is like to work for your organization.  These perceptions include most major elements of the workplace experience, including culture, work environment, management style, opportunities, and rewards.  Just like with many major products or brands, certain words, phrases, or descriptions will correspond with each employer and the associated workplace.  Moreover, when combining perceptions, a hierarchy develops that current as well as potential employees rank employers. 

While all employers have a brand by design or not, it requires serious and continuous commitment to have a successful brand that attracts and secures the most desirable candidates. A successful branding process typically includes:

  • becoming familiar with the characteristics of your organization;
  • assessing the characteristics and needs of your potential candidates;
  • gaining insight into the brand and approach utilized by your competitors;
  • defining your value proposition or what makes your organization superior to your competitors; and
  • developing and executing your brand and branding strategy.

Your Organization

A first step to launching as well as maintaining your organization’s brand is to conduct a comprehensive and open assessment of what is positive and negative about your organization.  Very few, if any organizations will only have positive traits, so it is important to have a realistic image of the traits present within your organization.

Potential Candidates

If your organization subscribes to the idea that potential employees would be lucky to work here, many strong candidates will opt to look elsewhere.  In the current labor market, organizations have to be selling their workplace and not expecting high quality hires to focus on sell themselves.  Consequently, it is important that employers have a good understanding of the preferences, needs, and interests of the high quality candidates that they are interested in recruiting,

Competitors

Since most employers do not have the luxury of being the sole, desired employer, it is critical to understand what your competition is offering and how you can demonstrate your competitive advantage compared to opportunities in their workplace.

Value Proposition

Based on the strengths of your organization and knowledge of your competitor’s practices, what you offer potential employees that differentiates your organization should be defined and the associated communication materials developed.

Strategy

Defining your competitive advantage provides the basis for your brand, but your strategy puts your brand into practice.   In the most successful organizations, the brand strategy impacts potential candidates as well as current and past employees.

Leadership Styles and Perception

Figure 1: Perception on Styles
Figure 1: Perception on Styles

A common question during interviews as well as performance reviews is: what is your leadership style? Although this is a pertinent issue for a variety of reasons, one of the core, underlying issues of leadership style pertains to how well a leader can adjust his or her style to maximize the results from those he or she supervises.

The leader’s repertoire of styles provides a collection of different approaches and styles that can be drawn on depending on the situation, environment, or needs. Alan Murray sums it up well in the Wall Street Journal Guide to Management: “Leadership is less about your needs, and more about the needs of the people and the organization you are leading. Leadership styles are not something to be tried on like so many suits, to see which fits. Rather, they should be adapted to the particular demands of the situation, the particular requirements of the people involved and the particular challenges facing the organization.”
As the market returns to some form of normality, talent will be harder to attract and retain. Consequently, as employees have more options outside of their current employer, a greater burden will be on managers to accommodate different preferences and needs. While the recession afforded managers less accomplished at using different approaches the opportunity to continue with more singular approaches, expectations have changed.

With that idea in mind, I recently reviewed a survey by HCS on the use of multiple leadership styles. I was curious about to what degree do managers possess this critical trait of a repertoire. Figure 1 summarizes the results of their 2015 survey of 1,500 employees, managers, and executives in multiple industries. The survey asked employees to identify the number of styles used by their supervisor, supervisors to rate themselves, and executives to rate the supervisors that report to them. As expected, the results differed by level.

More than 80 percent of respondents indicated that their manager possessed one style, while two styles equated to less than ten percent of respondents. Across industries and organizations, respondents agreed that most supervisors have one style. The self-responses from the supervisors were more generous in assessing styles. Approximately 25 percent of supervisors felt that they possess more than three styles.Similarly, managers that oversee the same supervisors signified that roughly 22 percent utilize three or more styles.

What do these results mean? There are several things to consider:
• We need to make sure that leaders recognize the importance of utilizing multiple styles;
• The lack of recognition of style use and effectiveness may result in managers not self-selecting for development; and
• Like many areas, perception differs from reality depending on level.

Success with Pay for Performance

Figure 1: Performance Review Process Elements
Figure 1: Performance Review Process Elements

As discussed in the last post, perceptions regarding pay for performance may vary by level in an organization. Although most would agree that no one believes their system is perfect, perceptions on how well this compensation strategy accomplishes it stated goals varies.

So, what are some of the steps taken by organizations where perceptions approximate each other across levels?

When examining successful programs, a number of practices correlate with those that experience success. Some of the major characteristics include:

• Ensuring support of performance and the utilized system at all levels of the organization;
• Considering performance management as a living system, not just a review process for allocating money;
• Making efforts to incorporate performance into regular discussions and interactions;
• Providing constant and consistent training to ensure that supervisors and employees understand how the system works;
• Evaluating managers on how well they provide feedback and coaching to employees;
• Seeking to link employee actions to organizational goals;
• Using an automated system that tracks interaction, outcomes, and reviews; and
• Utilizing multiple levels of review of scoring.

When examining specific process components, several areas are critical. Utilizing a national survey by HCS of 400 firms with more than 250 employees, the most common practices among successful organizations pertained to preparation, format, and review processes. The results of the survey appear in Figure 1.

As shown in the figure, most successful organizations train staff and supervisors. Approximately half (55 percent) offer quick prep sessions to remind supervisors of the process and helpful hints before the reviews are conducted. Almost 60 percent provide real time assistance during the review process to assist with resolving any review issues.

Although around only 25 percent utilize 360 degree evaluations, self-assessments are a key part of the process in approximately 58 percent of respondents. More than 60 percent give quarterly feedback and more than 90 percent require narrative in the review. During the review process, around 68 percent conduct calibration sessions, while almost 75 percent utilize multiple level validations.
Although each organization is different, these elements seem fairly universal among those that are successful with pay for performance.

Differences in Performance Perceptions

As the recession pushed organizations to practice care in spending while attempting to hang on to their highest value talent, pay for performance experienced a renewal. Faced with limited resources and increased demand for efficiency, leaders appealed to their higher level performers to do more with less based on the assumption that a targeted approach would be less costly and would make sure the money benefited those most valuable to the organization.

Now, as the economy improves, organizations seem to be questioning if pay for performance actually worked. Meaning, did it actually help to retain and reward the best talent in the organization? Similarly, if they failed to implement it during the downturn, many are asking if it is too late to join those already providing performance-based rewards in order to increase competitiveness in the future.

In all fairness, the recession did not spawn pay for performance and the mixed results of its use predates this decade. However, like other crises, leaders tended to risk change when experiencing sudden or dramatic uncertainty.

Over the last several months, I have been examining some of the experiences of those that implemented pay for performance during the downturn. Although the research did not explore every facet of these programs, a simple, yet central question kept reoccurring: do leaders and employees have the same perceptions of the pay for performance programs? Based on a sample of six major organizations that completed at least three rounds of reviews in the last five years, leaders, supervisors, and employees were asked a series of questions on their perceptions of the program’s effectiveness. A few of the major findings related to the mission, understanding, and results of the program appear below:

Picture6

 

Approximately 75 percent of leaders felt the program accomplished its stated mission. In most cases, the stated mission involved recognizing and rewarding high performers. Slightly less supervisors agreed with the question, while a little less than a third of employees agreed. These results would not be atypical of other leadership initiatives that come from the top down. Most pay for performance programs experience a communication as well as execution gap between levels.

The next two questions focus on the communication and understanding elements of the program. Not surprisingly, leaders possessed a high level of confidence that employees understood the system, while supervisors were less confident at approximately 56 percent.

On average, about 38 percent of employees agreed that they understood the tool and how compensation related to it. Similarly, leaders and supervisors felt confident that employees not only understood the program’s tools, but also know what actions and behaviors result in a higher score and more compensation. Supervisors appear the most confident. Given their role in ensuring that employees know how to improve, this result is not surprising.

The last question addresses the outcome of the program from a process standpoint: did the right people receive the reward? Similar to the other three questions, employees feel that the intent did not match the outcome. Roughly 31 percent of employees indicated that the reward went to the biggest contributors.

Some might argue that the results point to the inadequacy or even inappropriateness of pay for performance as a method of recognition and reward. Although it could be an element in that debate, I would argue that the results point more to a lack of appropriate appreciation of the complexity of managing human performance. Like most elements of management, ensuring that results reach potential is not easy. In the next posting, I will explore some of the actions of those that were more successful with their programs.

What Do Candidates Want?

Figure 1: Reasons for Training
Figure 1: Reasons for Training

After years of uncertainty in the labor market, things seem better. According to the Bureau of Labor Statistics (BLS), the first quarter of 2015 possessed more than five million job openings. To put this in context, the last time the US labor market approximated this level of openings was first quarter of 2001. So, as we enter this “better market” seeking to gain the best talent possible, what do potential candidates want?

According to the Towers Watson 2014 Global Workforce study, the most important factors for joining an organization rank as the following:

Base Pay/Salary
Job Security
Advancement Opportunities
Learning and Development Opportunities
Challenging Work
Reputation as a Good Employer
Vacation/Time Off

Clearly, compensation matters and serves as a core element to any offer for employment. Not only is more money one of the key ingredients for enticing a candidate to join a new organization, many desire to recoup their losses in income advancement form during the recession.

While job security is important to most of us, employers might assume that job security became a less critical element during the downturn as employees were socialized to a more unstable environment. The most recent generation to enter the workforce only knows uncertainty, while a significant percentage of current managers were promoted and led during this economic crisis and share a similar mindset. However, it is interesting to note that job security scored second only to compensation. Put simply, even among those that have not known stability, it matters. Forty-one (41) percent of those surveyed still considered job security as a key reason to join an organization.

Growth and development occupy the third grouping among responses. Most of us recognize that being part of a “learning organization” assists with attracting and retaining key talent. Capable employees want to not only be good at what they do, but also learn new things. A recent HCS survey (Growing Talent 2014) explored motivations for learning and found that developing more marketable skills held first place: 38 percent of respondents (see Figure 1). This is not surprising given the level of uncertainty in the market over the last seven years. Gaining more marketable skills not only improve external market possibilities, but internal ones as well. Similarly, opportunities for internal advancement encompassed the second most reoccurring category with 22 percent of respondents, while improving job performance accounted for 21 percent of responses. Assisting the team occupied the last option and garnered about 15 percent of responses.

Challenging work appeals to all of us. As a key predictor of engagement as well as satisfaction, the work needs to challenge as well as fulfill an employee. A fulfilled employees feels they have made a contribution to the organization, team, and customer.

Reputation continues to grow in importance as the Internet increases the availability of information about employers. Over the last few years, more than a few employees have launched discussion groups centered on what like as well as dislike about their employers. Employers have responded with alumni groups and other outreach to past employees. Clearly, this is an area that is going to grow in importance in the coming years.

Finally, time-off still matters. Although not a big predictor of retention, the availability of time off still matters when the employer is courting the candidate.

When considering your next offer, remember pay is not the only motivator.

Career Choices

CAREERMost of us at one point or another provided career advice to someone. It might be a friend, coworker, sibling, or child that wanted to better map out their future while maximizing the value of their skills and abilities. However, one might argue, how can you provide that kind of advice today when the world is so complex and ever changing. Moreover, as the world becomes more interconnected through not only transportation and communication, but also increasing levels of education and business acumen, competition grows and requires us to reinvent who we are and what we do.
Although this may seem overwhelming, the employee-employer as well as the contractor-employer relationship based on providing mutual value. The real key to responding to the aforementioned changes pertains to having the skills, abilities, and experiences that employers find most valuable. I ran into a past client in the Atlanta airport this week and we talked about this very topic. We discussed how tough the job market is for new college graduates and he shared a profound thought with me. He made the argument that the market has changed, but still values the most those categories of skills that have been paramount for a long time: specialized trades, sales, and management.

He defined trades broadly as any specialized skills that uniquely qualify someone to successfully complete a set of similar tasks. That would include diverse, but specialized occupations, such as plumbers, builders, surgeons, nurses, accountants, information technology developers, mechanics, engineers, consultants, and designers. Sales encompasses anyone, regardless of the industry that induce others to buy products or services. The management skill area pertains to anyone that can manage and lead people to accomplish a set of common goals or outcomes. Moreover, as would be expected, the combination of these skills only amplifies the rewards.
What does the data show? In the most recent Bureau of Labor Statistics summary of the highest pay jobs, occupations requiring specific medical expertise represent 14 of the top 20. The remaining highest paying jobs include chief executives, engineers, engineering managers, IT managers, marketing managers, and air traffic controllers. Similarly, US News and World Report ranks health care occupations in seven of their top ten with information technology rounding out the other three. Several career planning sites listed non-health related occupations only outside of the top 20 of most rewarded and fastest growing jobs.
Of the three skills categories, lets focus on one area: what he referred to as trades and we might call specialized skills. Specialized skills are still rare and will clearly be in significant demand in the near to mid-term future. Moreover, new labor market supply is not correlating well with the fastest growing segments of demand. For example, a late 2014 BLS report points to this gap by finding that there are more available, but unfilled jobs in the United States than there were before the economic downturn began at the end of 2007. Moreover, employers are hiring and firing less than before 2007 to hang on needed skills. A big portion of the gap in the available market pertains to the absence of STEM (Science, technology, engineering, and math) skills among US workers. A recent Brookings report (http://www.brookings.edu/research/interactives/2014/job-vacancies-and-stem-skills#/M10420) summarizes the evidence for the shortfall. The report finds that:

  • STEM skills, particularly those associated with high levels of educational attainment, are in high demand among employers;
  • job seekers possessing neither STEM knowledge nor higher education face extraordinary levels of competition for a scarce number of jobs; and
  • the gap between supply and demand is especially acute in certain metropolitan areas, where the average vacancy for STEM workers takes months to fill.

So, you need to give advice for those seeking to plan or change a career, having a trade, inducing others to buy, and leading others seems like fantastic advice.

Finding Your Way More Quickly

Figure 1: Time for Determination of Job Fit
Figure 1: Time for Determination of Job Fit

Most of us grew up assuming we would know what we wanted to do when the time came, follow that path and gain the training and education that we needed, and realize our dream by working our career in our chosen profession until we retired. Although this may present a simplified view of the reality of previous generations, career planning of the past possessed a little more predictability than it does today. According to the Bureau of Labor Statistics, the average worker stays at a job for 4.4 years. However, the workforce’s youngest employees are projected to average closer to 2 years per job and work in multiple careers. As a result, workers need to have a flexible set of skills and broad experiences, if they wish to be competitive in a faster moving environment.
Although there are a variety of factors lowering the average time at an employer, key change is the rise of considerations of job fit. Clearly, employees have used the first six months or even more to assess the “fit” of a job in the past, but, now more than ever, employees make a determination more quickly and feel that a poor “fit” is a valid reason for changing jobs. A 2014 survey by HCS of 1,000 employees in five industries found that approximately 55 percent of new hires make a determination of fit in the first six months. The HSC results indicate that a decade ago the percentage was closer to 44 percent. In other words, a new hire is making his or her determination faster. Figure 1 captures the results from 2014.

Obviously, a variety of factors could be behind this difference: labor market, demographic, societal, or economic change. A few of the factors that appear to have impacted the results the most include: rise of a knowledge worker-centered economy, more readily available job information, greater employee concerns with working in a culture of engagement, more emphasis on work-life balance, and greater acceptance of moving between jobs. This last issue may be bigger than we realize. Over the last several decades, perceptions among employees and employees alike shifted on how we look at success. Previously, spending years with the same employer demonstrated stability, commitment, and implied performance. However, with the migration to a more transient model of workforce management, stay somewhere too long equates to a negative characteristic due to a lack of ambition and potential stagnation. In some ways, the solidarity among the perceptions and attitudes of employers changed. When competing for talent, one organizations loss becomes another’s gain.

What does a concern with fit and the decreased time for determination mean for us as employers?

• We need to have a culture that matches the type of employees we wish to recruit and retain.
• We need to customize our on-boarding to match the needs and expectations of our new employees.
• It is not enough to get them in the door. Each new day requires us to give our employees reasons to come back.

Being Nice in a Linked World

niceI recently had a conversation with a colleague regarding how the concept of “being nice” varies across people. In our more connected, over-engaged, and fast paced world, it is easy to become impatient or even irritable and let the “niceties” go when so many other things press on us. For example, think how easy it is to be gruffer when we wish employees would get the instructions right the first time, staff would complete their work on time, or people would move a little faster in the grocery aisles. Our discussion arose from a debate over how long an employee has to be with the company before they warrant a going away luncheon. We both agreed that the nice thing to do would be to have a luncheon, regardless. However, most of our coworkers argued it was too soon or not needed in any circumstances.
Some might argue that in the past the golden rule played a bigger role in our mental calculus. People focused more on their behavior predicating how they will be treated by others. Although falling short of accepting a something similar to a system of karma, most saw the world in a time of less connectivity as being more connected at a human level.

Today, it our ever more connected world, actions and words circle the globe in a click of a button. Very few actions, events, or feelings go unnoticed by someone.
An article on Cnet.com this week reminded me of how connected things really can be (http://www.cnet.com/news/developer-curses-at-man-on-subway-meets-him-again-in-job-interview/). A Monday morning, London commuter when another traveler was in his way shoved the man and cursed him as he pushed past. Although we have all have those moments of frustration and anger, it is easy to forget that the little things do matter. The commuter later that day attended his scheduled job interview for an IT development position and was shocked to find that the man he shoved on the train was his interviewer. Although the interviewer commented that the candidate failed to be a match, surely the commuter’s attitude played a role in the decision.

Given the connectivity of our world and the fact that we all have bad days and say things we wish we could change, what can we do? As leaders, we have to remember that we are constantly being observed and analyzed. Every action that we take impacts perception, engagement, and outcomes. In the most caustic environments, predicting the moods and the appropriate responses become a cottage industry in the workplace. Even in more healthy environments, what we say and how we act enhances or undermines productivity. Consequently, we have to think before we act. As employees, we all depend on each other and an enemy today may be an important ally or teammate tomorrow. With organizations, we should give those going away lunches since being nice equates to giving a good feeling to someone that may be a future client, customer, or reference.