When It Comes To Building Talent, The Five-Year Plan Is Obsolete

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If boards want to help their CEOs devise a winning talent strategy, they need to focus on a much shorter time horizon.

How do you hire the right worker with the right skills for a future that you can’t see?

That’s an increasingly urgent question for companies as rapid changes in technology and consumer preferences combine to spin the business cycle at an ever more dizzying pace.

It used to be that companies could put in place a five-year hiring plan to match their long-term strategy and have some confidence in hitting the mark. Indeed, many companies still approach strategic hiring and skills acquisition that way.

But it is an outdated approach in a world where CEOs last, on average, five years, according to the Harvard Business Review, and where new technology is rapidly affecting workforce capabilities and expectations. CEOs and their boards need to think about what skills their workers will need in the near term to succeed. What do they need to know in the next one or two years? Not five.

Covid-19 has accelerated these trends, confronting boards and management with questions from investors, employees and other stakeholders about their business models. For example, the shift to online ordering and pick-up has made us all question why we ever waited in line at stores or restaurants.

This accelerating shift toward online consumption because of the pandemic is pressuring companies to turbocharge their digitization strategies and ensure they have the employees with the right skill set to make the transition. It’s become clearer than ever that technology is core to the business, not just an add-on.

The most successful companies in the coming years will be those that can thrive amid this unrelenting uncertainty and tech-driven change. To do so, they’ll need to embrace a skills-acquisition strategy that is more flexible and responsive to change than has traditionally been the norm.

There is a lot that companies, and their HR departments, can learn from the Agile approach used in software development. It’s an iterative approach to project delivery that builds software incrementally instead of trying to deliver it all at once. Applied to people, it means directing resources at skills development in small amounts to push boundaries, yet gauge effectiveness quickly. Depending on how much traction the business gets from its investment, it can either double down on those skills or scale things back. It’s a little like buying advertising through Google keywords where you can find the most bang for your buck by testing different iterations of words.

There is no one-size-fits-all approach to skills development in this era. Smaller companies in particular will, more often, have to go out and buy talent, paying a premium to make up ground in areas where they’ve lagged. Bigger, more sophisticated players won’t have to do that as much, often getting better results by investing in training and developing their own people.

Whenever possible, a company’s first instinct should be to look inward. There are major efficiencies to be had by training people who already know the business. In addition, companies that provide stability skills growth to their employees rather than panicking at the first sign of trouble win loyalty. This is important for building trust and affinity with customers, too.

We’re certainly not back in the 1950s, the vaunted “job for life” era. But this is an exciting time to learn and grow because of technology. Companies, and their boards, should worry more that employees will leave if they aren’t improving their skills than the possibility that training will be “wasted” if they then leave.

That’s not to say that companies should burn capital providing the same development opportunities to all staff. It’s better to take a selective approach based on individuals’ performance and interest. And borrowing from the Agile principle, investment in any particular type of training can increase or decrease depending on the results.

Here at the University of Phoenix, we’ve had our own successful adoption of this approach in meeting our growing need for data analysts in recent years. Since the cost of hiring data analysts was prohibitively expensive, we decided to build the capability internally using training materials and micro-internships for exceptional prospects.

As a result, we’ve been able to create a whole new analytical team from current staff. It’s been a win-win: We now have the skills needed to accomplish core business goals, and the newly trained employees have new skills that bring greater job satisfaction and offer wage growth.

This kind of smart investment in your people can boost employee productivity, loyalty and engagement. Once you give people space to learn and grow, they often give you more than you ever expected.

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