The Recruiting Crisis

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Back in the 1990s, Germany’s top model Claudia Schiffer brought cosmetics ads to life with a famous slogan that is still in use today: “L’Oréal. Because you’re worth it.” But when analysts at Boston Consulting Group (BCG) talk about the cosmetics giant, the term “worth” has a whole different meaning. BCG sees L’Oréal’s talent management as a model for other companies – because L’Oréal has recognized that employees are worth investing in.

Euro crisis further compounds skills shortage

L’Oréal rewards managers who find and promote talent from within their own ranks. Prospects for the future can advance to strategically important growth markets thanks to job rotation and career opportunities abroad. According to BCG’s analysis “From Capability to Profitability”, companies net higher revenues and profit margins when they invest in talent management. This despite an acute shortage of skilled professionals. The shortage alone is enough reason for companies to improve their HR management practices, especially when it comes to older employees and female staff.

The analysts at Accenture say the present euro crisis has exacerbated this lack of specialists. And Rainer Strack, a senior partner at BCG who is responsible worldwide for HR topics, discovered in his international comparison that Germany is “one of the hardest hit” countries. “Between 2020 and 2030, total headcount in Germany will go down by around 1.2% every year,” he reveals. “This means that the battle for qualified staff will get worse for a lot of companies.”

Next Page: Older employees hold crucial company knowledge

Fred Marchlewski. (Photo from Accenture)

So skilled young talents are rare – especially in the IT industry. Fred Marchlewski, managing director of the Talent & Organization division at Accenture, explains: “It is extremely difficult to get young, well-trained computer scientists excited about working with thirty-year-old technology. I know of a lot of industries where this is the case – such as the insurance industry.” The answer is obvious: Companies have to become more flexible and retain older employees. “We know from surveys conducted among the 50-plus generation that a lot of older employees would like to stay on longer at their company but that there aren’t many incentives for them to do so,” explains Marchlewski.

Young and old together – Promote tandem solutions

Older employees criticize remuneration and working time models as well as possible career options and training measures. “This is one of the main reasons for general dissatisfaction among older employees. But given the demographic change, it would be foolhardy to neglect these employees and continue sending them into early retirement,” notes the Accenture manager.

Strack takes a similar view. “Quite often, companies still need to learn how to deal with an aging workforce,” he says. Yet older employees, especially those in the IT sector, have a lot of experience and expertise. Who else knows how to handle software that was programmed in COBOL, for example? “It is essential that companies retain this knowledge,” Strack points out. Specifically, that means introducing tandem solutions – where young and old work together – and at the same time creating knowledge databases. Both Marchlewski and Strack call upon companies to provide opportunities for advancement and upskilling programs for people over 50. After all, these people still have many working years ahead of them.

Next Page: Men tend to promote other men over women

Strack does not want to discourage young talents from studying the so-called MINT subjects (mathematics, information technology, natural sciences, and technology). But we must bear in mind that one’s personal enthusiasm about IT does not guarantee academic success. “The dropout rate in computer science bachelor’s programs is 50%,” warns Strack. Mentoring programs could help young students stay onboard.

Generation Y: Little interest in technology

Marchlewski is less optimistic when it comes to the career aspirations of school graduates. “Many studies predict that more and more young people will shy away from technical or engineering jobs, and it seems to be a general phenomenon of the “old” world,” says the Accenture expert. He believes social trends are to blame: “The kids of Generation Y and subsequent generations do not want to study the same thing their parents did. This is not the case in Asia.”

As for the advancement of women, a much-discussed subject, Strack would like to come away from the lopsided focus on childcare. “Men frequently center in on this point, while women criticize the male-dominated corporate culture,” he says. It is a mark of this culture, for example, that men are promoted much more often than women. What BCG is referring to here is “self-cloning”, the psychological phenomenon in which decision-makers tend to prefer people that most resemble them.

Strack also determined that to date, only a small number of companies have developed recruiting strategies targeted specifically at women. “Companies need successful women as role models – both internally and externally,” says the expert. Marchlewski, too, has advice for decision makers: “Perhaps companies should not just come up with quotas for hiring women or assigning women to board positions. They should also introduce quotas for scholarships and internships.”