The pandemic has upended the talent world. There are two forces at play.
First, unlike previous workforce upheavals, this one has been led by employees choosing to part ways with their employers, not by employers paring their headcount. The “frozen in time” nature of the pandemic has caused many to reflect on their career paths. Decisions to relocate and work remotely, as well as to pivot and pursue a completely different option, are increasingly common.
Second, in response, businesses have not only learned to adapt, but many are figuring out how to operate successfully with less; some organizations are operating with as few as 50 percent of the team they employed a year ago.
In both cases, technology has been the enabler of this shift. It has alleviated the need for five-day-a-week, face-to-face interaction to get work done. And with fewer staff and less office space, businesses are embracing new ways of operating.
However, because businesses have needed to accelerate the implementation of technology to compensate for the reduction in headcount, a profound and ripple-through effect has occurred in the velocity of business transactions.
Companies can now serve up surgically-curated options to customers, and customers can make decisions and act on those decision more quickly. The ubiquitous nature of data, combined with the tools to house, clean and analyze this data (BI, AI and ML) give companies greater visibility into macro and micro views of their business. Today, better and faster decisions on the part of leadership are possible and required.
The bottom line is the speed with which all aspects of business is happening is increasing. All of this points to four key trends that businesses should keep in mind as they consider the outlook for 2022.
The “80-20” rule is now the “93-7” rule. The “80-20” rule historically referenced that in a pool of 100 candidates who checked the boxes, 20 of them were truly exceptional – leaders who had high impact and were difference makers everywhere they went. They saw around corners, had mental models that they applied successfully in all cases and, most importantly, were successful in making the case for these changes in the face of competing interests. However, the move toward automation, digitalization, and the speed with which growth is occurring has bent the rule; it is now the “93-7” rule. Why?
These trends have created both an unprecedented level of opportunities for companies to deliver new goods and services, and an unprecedented need for people who can lead these efforts. There is a gap between “knowing how” to do it – having read the instruction manual, if you will – versus having “done” it. The pool of proven candidates hasn’t caught up with the number of available opportunities, hence, from a practical perspective, the number of top candidates has shrunk.
The pace at which companies are accelerating demands situational awareness. With this increase in automation and technology, the speed with which companies are scaling is increasing as well. This impacts the list of “must haves” for today’s technology leaders in two profound ways.
First, companies operate as systems with different functions impacting one another. For example, a change can’t be made in product without impacting sales and marketing, as well as engineering and finance. Today’s top seven-percent leaders have that situational awareness and will quickly bring in their peers to discuss the impact. And when the moving parts of a business are frictionless, they accomplish tasks with speed and precision. Conversely, if a change is made without consideration of the impact to the business as a whole, things slow down to absorb and/or fix the impact. Which highlights the second “must have.”
Failures will become more dramatic. A frictionless business is an ideal state that will never be achieved in the long-term. There always have been, and there will continue to be, challenges. Mistakes will be made. However, as we become more dependent on automation, technology and software, our failures will come more swiftly, and their impact will be deeper.
Leaders with high situational awareness see the problems sooner and pivot more quickly, mitigating the damage that can be caused.
This high-velocity environment will also help spawn a new class of occupation – individuals who fix disasters caused by technology and automation.
Privately held companies need to adapt their compensation strategies to compete with high-valued public companies. For years, the competitive talent acquisition strategy of fast growth venture-backed and private-equity-owned companies was to promise greater compensation and wealth creation over time (e.g., lower base salary/greater equity), in comparison to public companies. The belief was that the private equity opportunity would deliver greater potential wealth at an exit. However, the combination of the 93/7 rule, and the pace of accelerated growth and high market valuations have changed the math.
Public companies that deliver RSUs on an annual basis – which upon vesting are immediately translatable into cash – now have a competitive edge in the war for top talent. The proverb, a bird in the hand is worth two in the bush is coming home to roost with private equity owned companies. This more immediate liquidity advantage is forcing fast-growth privately held companies to upwardly adjust what they are offering. Furthermore, RSUs are being offered to Directors and Managers, not just executives, so the war for top talent is being waged deeper into the ranks.
Written by Greg Selker.
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