FALL 2021 PEER ROUNDTABLES: Top Five Talent Takeaways

By Sophia Mikros posted 10-22-2021 09:48 AM

  

The challenges middle market companies face, the actions they are taking.

Number one with a bullet: That’s where talent ranks among the challenges facing senior leadership of mid-market and emerging enterprises. Because of the “Great Resignation” and the need to staff and fund strong growth, these businesses face a shortage of qualified, available people, an insufficient internal capability to develop talent on their own, and a critical need for a new talent strategy and a differentiated, sustainable way to attract and keep the people they need.

Talent far outweighs other issues like cost, supply chain, or shifting industry dynamics, with 63% saying that their No. 1 challenge is finding and keeping people, rethinking how work gets done, or both.

This and other findings come from a five-part series of peer-group roundtable discussions of the CFO Alliance and CHRO Alliance, one of the talent-performance solutions offerings of AchieveNEXT. The meetings, held between September 14 and October 5, 2021, brought together more than 250 mid-market finance and HR leaders from coast to coast, some online and others in person in Austin, Chicago, Dallas, Denver, New York, Philadelphia, and Washington, D.C.

Attendees, polled at the meetings, identified challenges and shared plans and best practices about how they are dealing with them. Here are the key findings.

1.  People issues are the biggest challenge leaders face

While inflation and broken supply chains compete with talent for headlines, talent commands far more attention from the finance and HR chiefs of midsized and emerging enterprises. Finding and keeping talent is four times more challenging than costs, according to the poll. While finding and keeping people is the most intense challenge, rethinking the conditions under which they work (workplace safely, remote vs. in-person vs. hybrid work arrangements, and so on) is the second thorniest issue, and by itself more difficult than cost or supply chain.

Taken together, these responses, plus the 14% who wrestle most with understanding the future of their industry, suggest that midmarket enterprises are giving renewed, deep attention to long-term strategic issues. Costs and supply snafus are urgent and painful, they seem to be saying, but will work themselves out. Talent, work and organizational design, and industry dynamics are simultaneously cyclical and structural.


That bi-focal view—a microscope to fix the immediate problem, a telescope to discern the future — is evident in the fact that 37% say they are coping with issues as they arise, while 45% say they are enacting both short- and long-term solutions or developing a long-term plan.

2.  The talent market is especially tight for specialists and workers

CFO and CHRO Alliance members agree: Specialist and technical talent is the hardest to keep and the hardest to find — nearly half say it is in these ranks and roles that talent gaps are widest. But hourly workers are also in short supply. Indeed, added together, just under three-quarters of executives say that a lack of specialist and hourly workers is what pains them most, with no meaningful regional difference.

These shortages may have meaningful implications for enterprise growth, inasmuch as it is harder to achieve step-change improvements in productivity from these workers than it is from, say, middle management.

Consequently, middle market performance leaders are hoping to hire people with the skills they need — ironically, because they already know these employees are hard to find and because the competitors from whom they want to recruit talent are probably trying to poach from them. Hiring skilled talent is the preferred solution of 34%, followed by 27% who say they are emphasizing internal training and 24% who say they hope to automate or outsource away the problem.


"We tend to hire more junior talent, folks who are smart and passionate about the subject matter, as opposed to making lateral hires. Training is expensive but an investment we’re happy to make because it helps with retention, and helps prevent our culture from becoming diluted." 
- Katie Calabrese, head of HR Security Risk Advisors, Philadelphia, PA


Data from other studies suggests that a preference for hiring over training is characteristic of middle market companies, regardless of how urgent their need for talent is. There is also evidence that the capability of developing talent internally may be a more effective long-term strategy, especially for companies whose competitive differentiation comes from expertise.

3.  Widespread disengagement underpins the “Great Resignation”

The effect on company culture of the stresses of the last two years—the pandemic, the search for racial justice, political polarization, etc. — has not been grave. Thirty-one percent of roundtable participants said these events had a minor negative effect on culture and 6% a major negative effect. The same number, 31%, noted a minor positive effect and 8% a positive. Twenty-four percent said the impact was neutral. If your glass is half full, then, 63% of companies have experienced a neutral or positive cultural shift; for those with half-empty glasses, 61% of companies have experienced a neutral or negative shift.

But data and discussions indicate a serious underlying threat to culture, one that is especially dangerous for mid-sized companies: disengagement. For some, culture has attenuated the difficulties in keeping in touch with colleagues in a dispersed, work-from-home workspace. For others, tensions have arisen between those working onsite (in factories, for example) and those with more flexible working arrangements (often the bosses of line workers). There is also a clear (and seemingly growing) need to address diversity, equity, and inclusion (DEI) issues with practical actions, not just pronouncements of good intentions, to expand talent pools, and strengthen employee and management development, and improve company culture generally.

"What is it that will make people love their jobs 10% more?"
Chonie Bradley, CFO 1906 New Highs, Henderson CO



4.  Leaders are moving beyond pay and benefits to attract and retain employees

Nearly half the participants in AchieveNEXT’s Talent Acquisition, Compensation, and Culture survey said that they lack the tools to deal with the human-resources challenges their enterprises face. Throwing money might be a short-term help but is not sustainable, nor does it address the underlying questions—job quality, a sense of belonging, a belief in one’s place in the future of an enterprise—that in the long run bring and keep people with the specialist and leadership skills that differentiate one company from another.

The overall employee value proposition—the sum of all the benefits, tangible and intangible, received by staff—is not working. Covid disruptions and racial justice protests have brought to a boil issues that were simmering and much discussed (for example with regard to what Millennials expect from work) but not much acted upon: flexibility, work-life integration, values, feedback, opportunities to learn and grow.

"One big challenge is reestablishing upskilling and learning. In our business, younger team members have always learned best by shadowing seniors in their day-to-day work with clients. We have to reinvent that."
Tim Weber, CFO Great Banc Trust, Lisle, IL


At this point, middle market and emerging enterprise leaders appear undecided about the best path or paths forward, with almost equal numbers saying they expect changes in talent development, work arrangements, and pay. Just over half of the executives say these plans are in progress, but three out of ten say they lack the resources to do anything now.


5.  Amid a world in flux, key truths endure

Overestimating the extent of change can be as dangerous as underestimating it.

While it is clear that two years of pandemic and other stress have altered attitudes and arrangements about work, perhaps forever; and while it is also evident that some trends, such as digital transformation, have been significantly accelerated in the last two years, and while almost no one believes their companies will return to being what they were at the beginning of 2019 — it is also clear that the business models of many enterprises are fundamentally and structurally sound, needing modernization but not gut-renovation.

Still, it is remarkable that a majority — albeit a narrow one — expects that their business model will be significantly or radically different within just two years, not just in whether people are in the office or in their dens, but in terms of customers, balance sheet, or operating model.

Clearly, however, talent — finding people, keeping people, and helping them grow and do their best — is and always will be the key that unlocks the door to change, while also ensuring that a company delivers on the promises it makes to its customers, shareholders, and stakeholders.


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Let us know how we can help.

Summing up the data and discussions, AchieveNEXT’s CEO Nick Araco, Jr., said “While there are still many unknowns, it’s clear that talent issues — acquisition, retention and development — will continue to be a key driver of enterprise growth. Leaders can’t just do things the way they’ve always done them.”

Addressing talent challenges while meeting ambitious growth goals requires a combination of peer-to-peer learning, access to robust benchmarking data, and expert human capital and strategic solutions. The opportunity to share real-world concerns and solutions, combined with talent performance solutions specifically designed for the needs and resources of midmarket enterprises, makes AchieveNEXT your best source of guidance for the future.

To learn more about the CFO Alliance and CHRO Alliance, contact Greg Wood, Chief Operating Officer, Peer Networks.

To discuss AchieveNEXT’s Talent Performance Solutions, contact Christin McClave, Operating Partner.

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