Industry Talent Crisis - Human Resources
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: Human Resources

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Industry Talent Crisis

Written by Bill Sitter

Article Date: 01-01-2006
Copyright (C) 2006 Associated Equipment Distributors. All Rights Reserved.

To attract top talent, promote the values of your company and opportunities for growth.

"As the war for talent heats up, workforce stability will become imperative for profitability and, perhaps, survival." This attention grabbing quote is from the book "Impending Crisis Too Many Jobs - Too Few People" by Roger Herman, Joyce Gioia & Thomas Olivo. 

And they go a step farther and add this chilling prediction: "Through 2010, we will have a shortfall of 10 million workers, the situation will be made even worse by the available workers' insufficient knowledge and skills... expect to see more in-house corporate learning, including an emphasis on business literacy."

We know there's a shortage of skilled technical people and leadership talent in our industry. Boomers are retiring in large numbers; there are too few "Generation Xers" to replace them; and young people are seeking - and finding - better paying, and/or more exciting career options. 

To find out what's working in the hiring and retention of talent, we surveyed 80 equipment industry senior managers; this is what they said:

Rate your success at hiring leadership talent from outside the equipment industry. What types of roles have worked out?
Wow! The responses were all over the map. Dealers and manufacturers report fair, to good, to high success rates. While several report disasters, multiple failures, and generally weak results. The most successful results seem to be in non-industry specific skill areas: accounting, IT, HR, admin, and engineering roles, with a few reporting success in hiring sales reps from outside. 

One respondent said, "I would rate our outside hiring success as high. You can teach the business, you can't teach smarts."

And another said, "We have begun to focus less on the industry and more on success profiles and personality ‘fit'. The learning curve is shorter if they come from this industry, but that varies with job functions."

Were outside hires people you already knew, and what hiring techniques proved successful? 

The vast majority said they generally don't know the people they hire from the outside. Many sources for fresh talent were mentioned; the most popular were networking, search firms, Internet postings, newspaper ads, and direct referrals by employees. 

In "Impending Crisis," the authors chart a straight line correlation showing company performance improving dramatically at companies where new hires join the company because employees recommended them.
 In commenting on the importance of company culture, the authors say: "People want to work for a company with high values and standards. They want a culture that provides a much-needed sense of community. Today's workers are not interested in status barriers - everyone works together. Traditions, rituals, and history are all important as threads that weave together the working community."

One respondent echoed that: "We believe people are interviewing both our company and this industry. Give people, from outside, details on your company, this industry, and the contributions made to society. Have them meet several people to sense the spirit and teamwork - your culture."

"Our reputation is our main draw," said another respondent. We are very involved in all the communities where we do business."

Do you use special training programs that have proven to be effective for outside hires?
Almost every company reported a ramp-up in training plans and the variety of approaches is significant. A few of the most popular are mentoring or shadowing, a formalized training regimen, OJT coupled with specific skill related instruction, rotation through multiple departments, time in the field, factory and other outside schools, and management training programs.

One respondent - we hope facetiously - said, "Our orientation usually is showing them their desks."

Another respondent said, "We focus on people management. Make people feel important - invest in them. Give them a clear mission statement, lay out their personal training program and involve them in company meetings and project teams."

And, "We started training classes for admin, sales, parts and service personnel. Also a beginner level class for managers with senior management potential."

Have you had success with pre-employment tests?
Results were mixed, but clearly there were more "yes" than "no" answers. The range of pre-employment selection aids was wide and included specific mechanical skills tests, various psychological profiles, and various style and personality profile indicators. 

One respondent said, "We've had excellent success with on-line assessments, and we use a battery of exhaustive tests for management hires that have been very successful."

We asked how outside hiring might be made more successful.
Responses run the gamut:

  • "Look for leadership and long-term commitment."
  • "Hire attitude - train talent."
  • "Really check references on all new hires."
  • "Don't settle - only hire the best."
  • "Promote from within whenever possible."
  • "People skills and the ability to communicate are vital."
  • "A fresh perspective can be an asset, especially when mixed with 20-year industry veterans." 
  • "Talented people are worth every penny. Pay for talent, but be alert, because this industry is moving way too fast to have you spend time, money and other resources and then make a bad mistake."
My favorite response was, "Leaders who are hired from outside must have good functional skills and competencies. However, success demands involvement in this industry, so we take serious steps to integrate managers into our business. Our weekly meetings involve open sharing of information and our challenges." 

And one final response on this question: "This industry needs to guard against becoming inbred. We could stretch our horizons with the right outside talent."

Describe your current need for supervisory and managerial talent.
As you might have predicted, respondents said they need talent.

The responses included:

  • "We're not quite desperate, but close."
  • "We're always looking for good leadership talent." 
  • "Our need is extreme. We have lots of managers but few real leaders."
  • "We're hurting for strong managers and always need good service managers."
  • "It's the 80-20 rule and some positions always need to be upgraded or replaced." 
However, about 25 percent of the respondents said they have the leaders they need. Two noteworthy responses were: "We home grow our bench strength. We are about to begin a management development program for five or six people to prepare them for greater responsibility." And: "We're always looking for top leadership talent. If Mr. or Ms. Right comes along, we hire them and work them into our business. As "Good to Great" spells out, ‘Having the right people on the bus is critical to business success'."

Do you have plans to retain experienced employees beyond normal retirement age as a way to fill the talent void?
The response was varied. More than a third have no plans to retain folks past retirement. A few have some experience retaining more-experienced employees. And, nearly a third are very pro-active with talent-retention programs, formally or on a case-by-case basis.

One respondent said, "We have a progressive retirement program that allows retirees to work part-time for two years and then retire fully." 

Several respondents reported using semi-retired associates as mentors, technical resource people, reps for key sales accounts, on-call consultants, equipment inspectors, and training specialists.

The flip side responses expressed concern that retaining retirees might block advancement opportunities, discourage future managers and stifle new ideas.

"We hired a number of young folks this year," said one respondent, "and it has been invigorating to our whole organization, with the influx of energy. I'm excited about their future and ours. We need more top management talent."

Commenting on older workers, the authors of "Impending Crisis" say, "The over-65 age group, in the United States represents over 33 million or 13 percent of the population. The robust economy will provide tremendous opportunities for older members of our population. Retirement at some pre-determined age... will fade... as people continue to work. 

"The jobs will be there, income will be available... and people will have the opportunity to remain active, productive members of society. The concept of ‘retirement' will undergo significant change, challenging employers to build new flexibilities into their relationships with older workers."

What has been successful in attracting new employees?

Responses included:

  • "Attracting and retaining new people to our company and our industry is a critical problem that limits our ability to grow."
  • "We've done a poor job of attracting ‘promotable' employees. We're working on a tech school co-op program and hope it will bear fruit in a couple of years."
  • "Don't overlook family. We have four stores and the following sets of relatives: three father-son combinations, five sets of brothers, one uncle-nephew, and one set of brothers-in-law that want to learn and get ahead. We explain our training programs and have candidates meet employees who have advanced here. We discuss our company performance and future growth goals." 
In "Impending Crisis," the authors chart the level of pride employees express in their companies in relationship to the average revenue generated per employee - that relationship is a straight line. Employees will consistently be more productive, if properly managed, when they are proud of their company and their leaders.

These next survey responses validate that premise:

  • "The key is retention. We offer the best total compensation package. As a result, morale is excellent and we retain people. Our employee recruitment bonus plan helped us hire three lead mechanics, and we have a waiting list of folks who want to join us."
  • "The most effective hiring tool is our employees telling prospects what a great company we are. We treat people well, like family, and show appreciation for their roles on our team."
  • "Have a great company, be profitable, treat people well, and share your vision and passion for your business and this industry. Promote the values of your company and the opportunities for growth...and you will attract and retain top talent!"

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Article Categories:  Human Resources