Steven's Blog

Labor Shortage Success

Labor Shortage Success Manifesto

Every CEO with whom I speak bemoans unfilled positions, many of them critical to the business and complain about the dearth of competent candidates. How do you successfully secure great talent in a tight labor market? Below are the most effective tactics I advise.

1. Hire the weird. Would you hire a Japanese man in his mid-twenties who had dropped out of university after the first year, took himself to Morocco, learned French and Arabic, set up a trading company specializing in Persian rugs, which he ran for a number of years until a dry spell in the business forced him to close it before it became completely insolvent? This is exactly the question I posed to the human resources director of a major French company here in Japan. His response? The candidate would not likely make it past the CV screening, and most hiring managers in the company would probably reject him out-of-hand—this despite the CEO’s bemoaning of a dearth staff with foreign language ability, boldness in initiative and action, and entrepreneurial spirit, all of which he has made explicit priorities in the company culture. Real excellence rarely fits a mold. How many excellent candidates is your business turning away simply because they don’t adhere to the norm?

2. Fire the mediocre. Excellent people always attract other excellent people. The Japanese director of a European company’s sales division responsible for hundreds of millions of euros revenue in Japan fired three-quarters of her staff upon taking on the role simply because she viewed them as mediocre performers. As soon as she did, other ambitious excellent staff elsewhere in the company immediately requested being transferred to her division. She had no trouble filling the rest of the positions with new hires, even though other directors in the company, including the HR director, were complaining about a dearth of good candidates for employment.

3. Scrap pay grades. Never pay any more than the industry mean salary for anyone—as long as mediocrity is your goal! A head of sales at a major European company in Japan responsible for hundreds of millions of euros in revenues was desperate to fill a pricing manager position. A competent one could easily make a difference of tens of millions of euros to the bottom line, but such people are rare. Those with English ability are even more rare. He finally found the perfect candidate, but the salary requirement was twice the industry mean. Finance refused to allow an offer of more than twenty-percent above the mean. Even then, HR was concerned that such a discrepancy was beyond the band of the pay grade, and should word get out, other employees would view the compensation as unfair. While the head of sales was trying to negotiate internally, a competitor made a successful offer to the candidate. Are people in your company prioritizing saving thousands over earning millions? If you are not sure, find out! Click To Tweet

4. Increase the value of what you do. There are two ways to grow a business. You can do more of the same, which typically requires a linear scale increase in resources, including people, or you can increase the value of what you do, allowing you to take a return on your resources, including people, to the next level. A European manufacturer in Japan had built a large and successful business selling into retail networks. However, the market is highly fragmented requiring many salespeople to service lots of small accounts, and most retailers prioritized discount products rather than the premium products of the manufacturer. The pressure to reduce price was constant, and distribution was a nightmare. In the meantime, the company developed relationships with other large industrial manufacturers that used the product as an input and would buy in bulk from a single point. That business is more profitable, yet requires only one-tenth the staff—albeit staff with a higher level of selling skills. The company will likely wind down the retail business and transition its most competent staff to the new business as a way to grow.

5. Demand referrals from your employees. The CEO of an American technology company was struggling to recruit for a mid-manager position. A Tokyo-based talent search company finally found a great candidate, who accepted the company’s offer of employment. On his first day of work, the CEO noticed many of the other managers on the floor greeting their new colleague with familiarity and congratulating him for coming on board, some even high-fiving him. Many of the managers knew the guy from previous roles in the industry! In the meantime, the CEO was stuck paying a commission to a search firm for successfully introducing a candidate many on his own company’s staff already knew! That very day, the CEO insisted on everyone providing three names of people they knew who would be good employees for the company, whether they were currently looking for work or not!

Have you had success in hiring despite market conditions? Drop me a line and let me know what you have done!

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