“They’re now nipping at the heels of Jelly Belly,” says Paul Finkle, president of WEA Consulting and SharedHR, a web-based HR system in San Rafael that counts Gimbal’s Fine Candies among its clients.
“They’re now nipping at the heels of Jelly Belly,” says Paul Finkle, president of WEA Consulting and SharedHR, a web-based HR system in San Rafael that counts Gimbal’s Fine Candies among its clients. “They’ve taken a lot of Jelly Belly’s business. They were once a gnat buzzing in Jelly Belly’s ears; now they’re more of a hummingbird. Soon they’ll be even bigger.”
This is just one example of what the right hire can do for a business. That person can take a $2 million company and turn it into a $25 million company. By recognizing, attracting and holding onto key talent, businesses can attain even the highest goals.
Unfortunately, finding the ideal employee is about to get much harder. Industry specialists say the employment pool is tightening so much that a war on talent may be about to erupt in the North Bay. In 2007, it’s going to be harder than ever to find workers—and even harder to keep them.
Hiring across the board
In contrast to the aftermath of the dot-com crash in 2000, when large companies laid off entire workforces and hiring slowed to a trickle, today’s employment agencies are seeing job openings everywhere they look.
“It’s an utterly different environment than it was a couple of years ago when people were banging on the door for a job,” says Laura Powell, director of business development at Kreuzberger|Associates, a Marin County-based executive search and contract staffing firm. “In fact, we’re seeing quite the opposite. Companies are hiring across the board. Finding quality candidates is becoming a challenge.”
In 2006, unemployment rates fell in all three North Bay counties. From January to September, rates fell from 3.7 to 3.2 percent in Marin, 4.3 to 3.7 percent in Sonoma and 4.3 to 3.2 percent in Napa. The three counties also gained jobs during that same period. Napa saw 4,100 new jobs, and Marin saw 1,600 jobs while Sonoma saw 1,000.
As a result, more workers are employed, and fewer are looking for work. This means finding employees is going to be tougher—especially for certain industries, including finance, clerical and health care. In particular, accountants are in hot demand throughout the Bay Area. They’re needed to oversee new projects and protect corporations from the kinds of corporate scandals WorldCom and Enron experienced. As it is right now, there aren’t enough people coming out of accounting school to cover the need.
But these aren’t the only positions in demand. Early indications are that most fields will have trouble finding workers in 2007, believes Finkle. “If you haven’t noticed [the hiring crunch] yet in your industry, it may be because it’s pinching other industries first,” he says. “This is only the beginning. Virtually every industry is going to be hiring in 2007.”
The North Bay isn’t the only region experiencing this sudden lack of capable employees. It’s a problem all across the Bay Area.
“It’s very tight right now all over,” affirms Paige Wray, Santa Rosa branch manager for Adecco, a full service international employment agency that covers Sonoma and Napa counties as well as other parts of California. “It’s consistent with what we’re seeing in our other branches, too. I was talking to branch managers in San Francisco and the East Bay, and they’re also seeing a labor shortage.”
In addition to the job surplus, the North Bay workforce may be shrinking. For some positions, like software engineers and lawyers, the availability of jobs and the promise of higher salaries could be drawing employees from the North Bay to other parts of the Bay Area. And then there’s the well-documented flight of the 30-somethings. Between 2001 and 2005, the number of people between 30 and 39 years old dropped almost 13 percent in Sonoma County alone, according to the Press Democrat. As this age group leaves the area for cheaper housing or better job opportunities, a large chunk of the labor force leaves with it.
“The young people leaving may be part of the phenomenon,” says Craig Nelson, executive vice president of Nelson Staffing Solutions, which has offices in all three North Bay counties. “Clerical workers, for example, tend to be young people who don’t make a lot of money, so they may be going somewhere less expensive to live. But it’s hard to know if that’s the whole case.”
The California Economic Development Department (EDD) released predictions for the fastest growing occupations per region between 2002 and 2012. In Marin County, the most needed jobs will be scientific in nature, including chemists, environmental engineers and biochemists. In Napa, the hottest jobs match the county’s heavy agricultural and tourism bases and include truck drivers, fitness instructors and hotel clerks. In Sonoma, the fastest-growing positions vary, from software engineers to medical assistants to construction workers.
Only network systems and data communications analysts—the fastest growing occupation in California—appeared near the top of all three North Bay lists. Otherwise, if these predictions are any indicator, the three counties may soon start to need completely different kinds of employees.
Attracting and retaining talent
As employers struggle to obtain good workers in the coming year, the supply shortage will naturally drive up wages. In addition, the minimum wage increased from $6.75 to $7.50 on January 1 and will increase again to $8 in 2008. A higher starting wage could drive subsequent salaries up even farther.
Since it will be more difficult—and expensive—to get new employees, businesses are going to be holding onto current workers more tightly. This means when employees give notice that they’ve accepted a new position, the old employers are going to be more likely to counter-offer with a higher salary. But it also means many employees are going to start getting calls from competing companies with offers for work—and more money.
“With the market contracting this quickly, you’re going to have to put steps in place to retain your key talent,” warns Finkle. “You can bet they’re going to be getting recruiting calls. In fact, you should just assume they’re already getting those calls.”
The best thing for employers to do in this environment is concentrate on making the workplace as attractive as possible to employees. This does two things: holds onto existing workers and makes the business an attractive place for new hires.
“It’s two sides of the same coin,” says Finkle. “Providing things like good benefits and an interesting career path will both maintain your employees and attract talented people.”
Retaining staff is also far less expensive than hiring a new one, Finkle points out. Whenever a company loses an employee, it loses all the time and resources it put into him or her. In fact, when a worker leaves before two years are up, a business has invested more into that person’s net training than it’s gotten back in return, making it a net loss for the business.
On top of that, studies have shown that when you factor in things like recruiting, orientation, training, lost productivity and lost customer satisfaction, replacing an employee can cost 70 to 200 percent more than that employee’s annual salary. So maintaining a workforce, especially during a period when salaries and benefits like health care are increasing, makes sense.
The good news is, while many managers think a person’s decision to stay at a job is based on salary, in reality, while salary and other financial benefits do matter, so does the work environment.
“Initially, when you recruit an employee, compensation and benefits are going to attract them,” says Nelson. “But at the end of the day, it’s the culture you provide that keeps them—things like how people are treated. Do they feel like they contribute? Do they feel valued?”
In 1999, global management consultancy the Hay Group interviewed 500,000 employees at 300 companies nationally to determine why people stay at their job. Surprisingly, they found pay was the least important retention factor. The number one reason people cited for staying at their job was career growth, learning and development. After that, factors such as having challenging or meaningful work, working with great people, being part of a team and having a good boss were their reasons for staying.
Only a few years ago, most employers didn’t realize this fact, but they’re starting to catch on. More companies today are offering creative benefits, such as on-the-job training, time off for community service, telecommuting, childcare, gym memberships and financial planning.
“It can also be as simple as thanking someone for a job well done,” says Nelson. “Sometimes the things that matter aren’t the things that can be measured monetarily.”
Praising workers is more than just a nice thing to do—it also shows them they’re being noticed, which not only encourages them to continue to do well but also keeps them from getting complacent. This is the kind of thing good managers know.
In fact, encouraging employees was among the top strategies of the best managers, according to a Gallup Organization study that looked into how to cultivate a productive work environment. The managers also selected employees for talent rather than experience and set clear expectations with defined steps meeting their goals.
On the other hand, rapid employee turnover may be a sign of bad management. If a company has too many people leaving, it can get a reputation as a bad place to work. That, in turn, may steer some people away from applying for open positions and keep a business from getting a crack at that top talent.
Finding the talent
Every human resources manager has experienced it: You put a job opening in the newspaper or on websites like craigslist.org or monster.com. Within a few days, you have hundreds of résumés, but most of them look completely wrong for the position.
Sifting through that stack to find qualified people can be a challenge. Of course, there are techniques for narrowing down the pile. Some are as simple as asking potential interviewees to complete a test before interviews. This can show who’s serious about the position. It can also weed out what recruiters call “tire clickers” (people who blast their résumé out to every job opening) as well as give employers a preliminary idea of candidates’ skills.
Once it’s narrowed down to a few people with the right skill sets, another trick is to “hire for fit,” which means looking for the employee who seems to click with the company. This can be an imprecise science. Start by outlining the core values and goals of your company and look for people who seem to agree with them. Then consider how this person might integrate into the office culture—Can he or she keep up with the pace of work? Will this person get along with the current employees? Is this person a self-starter or someone who needs a lot of guidance, and how does that compare with the position?
Considering these questions can help narrow down the candidates to the one who will benefit the company the most.
Another option is to use a recruiting company, which will sort through potential employees for you. In a time where finding talent is tough, a good employment agency may be worth every penny in saved time and resources.
Of course, these days employment agencies are having trouble finding candidates as well. Paige Wray from Adecco, which provides staffing for Amy’s Kitchen and Verizon Wireless among others, says recruiters have to be increasingly aggressive when seeking out new recruits.
“We’re definitely needing to be more proactive in locating candidates,” says Wray. “We’re having to find people through posting ads, going out to the candidates and things like that. They aren’t coming to us anymore.”
Other companies find talent by going directly to the colleges and universities. Agilent Technologies, the second largest employer in Sonoma County, plans to hire 500 new people in 2007 through its new college recruitment plan. Approximately 50 of them will be for the company’s Santa Rosa site, which currently employs 1,500 people, according to Jeff Weber, public affairs manager for Agilent in Sonoma County.
“We’re going to revamp the college recruiting plan this year,” he says. “We’ll use the plan and a new leadership team to meet our hiring needs by going directly to the schools.”
The company is sending 100 recruiters to top California colleges like Stanford, University of California Berkeley and California Polytechnic State University. Throughout the year, it will host career days, bring in guest lecturers and donate equipment to departments—all to get close to the smartest, interested students.
As with Gimbal’s Fine Candies, another way to find the best staff is by hiring one good employee and putting him or her in charge. In most industries, talented people know other talented people, and they want to work together. Hiring a major player who’s well thought of can be a “lightning rod” for finding a good team, according to Finkle.
Finally, while it may seem counter-intuitive, investing in technological infrastructure within a company can also help with hiring. Having up-to-date technology creates a consistency of standards across the organization, which means employees all need the same level of technological skill. It’s simpler—and usually less expensive—to invest in machines than to try to find employees who can use multiple technologies in addition to other skill sets. (Not to mention the increased productivity and time saved when people don’t have to fuss with out-dated and mismatched technology.)
“It’s almost always cheaper to invest in technology,” says Finkle. “The human element is an imprecise science that’s hard to measure. Technology is a more tangible investment with a more direct return on your dollar.”
It’s this unpredictable “human element” that makes up the very nature of hiring. Deciding whether another person will fit in with a company can be a long and frustrating process. However, in the end, choosing well is essential to what (and how) you do this year…and in the future.
“When you run the numbers, who you hire makes all the difference in the world,” says Finkle. “Because when you think about it, the common denominator in any industry isn’t the equipment, it isn’t the product. It’s the people.”
