1. Has the “War for Talent” Become a Cold War? Implications for Policy NGA 12.4.01 Peter Cappelli The Wharton School

2. Our Agenda… The Talent Wars What’s different about the next generation –What do they expect? Will it continue to be hard to find good people? Will we return to loyalty and security?

3. Is There Something Really Different About Jobs Now? Yes. The notion of a secure, long-term career is harder to imagine. AMA survey – 63 percent cutting in one division and expanding in another Economy turning on a dime – –Employers expecting to hire 19% more college grads in Spring 2001 than in 2000. –By Sept 2001, expecting to hire 20% fewer grads.

4. …What Else? Talent Management – the best really matter –Jobs offer more scope for contributions –And skill requirements rising –How do you feel about forced rankings? Demographics…? –A shortage of people, of new hires, or technical skills? –The engineering “cobweb” model

5. Characteristics in First Employers* Please rate the importance of each of the following in choosing a first employer Challenging assignments Company values balance between personal life and career Competitive benefits Competitive salary Financial strength Good reference for my future career High-achiever program High ethical standards Immediate responsibility Likeable/inspiring colleagues Ongoing educational opportunities Opportunity to influence my own work schedule Opportunity to specialize Opportunities for continuous learning Secure employment Variety of tasks or assignments * From Pricewaterhouse survey of 1500 MBA students from around the world

6. Characteristics in First Employers Please rate the importance of each of the following in choosing a first employer Good reference for my future career --------------------------------------------------- 42 % Company values balance between personal life and career ------------------ 41 % Likeable/inspiring colleagues ----------------------------------------------------- 37 % Competitive salary ------------------------------------------------------------- 34 % Challenging assignments -------------------------------------------------- 33 % Competitive benefits ------------------------------------------------------ 32 % Opportunities for continuous learning ---------------------------- 31 % Opportunity to specialize -------------------------------------------- 30 % Secure employment --------------------------------------------------- 30 % Financial strength ---------------------------------------------------- 29 % High ethical standards ---------------------------------------------- 29 % Ongoing educational opportunities ------------------------ 27 % High-achiever program --------------------------------------- 26 % Variety of tasks or assignments --------------------------- 26 % Immediate responsibility ---------------------------------- 24 % Opportunity to influence my own work schedule- 24 %

7. Is The Next Generation Different? Yes. They don’t believe the old deal. More willing to take risks -- failure ok Building careers across jobs –autonomy –clear performance management –prefer flat hierarchy What to do? –Explicit and short-term contracts –tailor job to individual

8. What Caused the Change? Institutional Ownership and Shareholder Value Pressures from Markets: Speed and Variety The Third Wave of Corporate Restructuring New Management Techniques: Bringing the Market Inside the Firm

9. Effects on Employee Management Employee Tenure: –Down with employer: Up with occupation –Dismissals quicker Training: Not rising Wages: Returns to seniority falling The Big Management Challenges –Retention, Training Investments, Commitment

10. Online Recruiting Changes The Game for Everyone Opening up the labor markets Making info cheap, shifted the balance of power to employees –Will employees continue to believe management? The “passive” applicant now SO easy to find and hire –Wetfeet survey – 36% happy with their job but willing to move within 6 months! – Auction sites like NurseAmerica.com – what’s next?

11. …So does this add up to something new? Yes, There is A New Deal at Work Challenges how we think about recruiting, retention, training Challenges how we think about managing the next generation

12. Has the Economic Slowdown Reversed All this? B-to-B and B-to-C…. Jobtrak.com poll – year 2000 –26% college students said start-ups were first choice –31% said Fortune 1000 What’s it look like now…?

13. …not yet… In year 2001, 12% said start-ups v. 36% Fortune 1000 – away from start-ups, but no great flood back to big companies. For “hot jobs” in engineering, IT, still about 2 jobs per good applicant

14. How Are Employers Responding? Get More Sophisticated About Recruiting… Moving toward internships and coops – –50% of grads may have commitments to employers beginning of senior year –The GE Experience –Accenture – in Sophomore year

15. Employers Getting Closer to Schools….

16. Training: Greater Need, Less Ability to Fund…. The Challenge is to Finance the Investment Having Employees Share the Costs –Tuition –Training contracts Reducing the up-front investment –On-the-job, just-in-time

17. Policy Implications? State and Local Are Where Action Is…. From Tax Incentives to Workforce Initiatives…. –Can anyone navigate this system? Will Business Follow the Smart Workers?

18. What Will Remain from the Talent Wars? Faster cycles – recruiting even with downsizings “Talent” remains in short supply even if workers aren’t Open labor markets demand new skills from HR