Managing Labor Trends

Two seemingly disparate employment trends converged in 2012, spurring companies to actively recruit skilled labor and workers with management potential while asking their employees to do more with less.

More than half of U.S. chief executives surveyed by PricewaterhouseCoopers said a dearth of skilled talent could threaten their companies' growth prospects. To improve the situation, nearly three-quarters of U.S. CEOs said they expected to change their talent management strategies, while 80 percent said they would improve employee engagement practices. Many also are developing leadership pipelines.

While weaker companies have let people go amid market uncertainty, "organizations that are financially doing better are looking more aggressively for talent," says Tony Frey, senior vice president in the services division of the Carlisle Group, a Carlisle, Pa.–based executive search firm.

"Organizations that are financially doing better are looking more aggressively for talent."

–Tony Frey,

Carlisle Group

Staffing Up

Higher-end retailers had the opposite challenge during the recession. Irv Cernauskas, co-owner of Chicago-based Irv and Shelly's FreshPicks, says many steady customers said they could no longer afford home delivery of locally grown and organic produce–FreshPicks' specialty–because of the economy, so "we had to introduce new products to bring in more sales revenue from customers we still had" while marketing aggressively to bring in new business.

The strategy worked: FreshPicks continued to hire throughout the recession, and in December it expanded delivery to Milwaukee. "If we've been able to weather the last few years as well as we have, as the economy continues to improve, even if it's a slow improvement, we should be able to do fine in the next five years," Cernauskas says.

As the economy shows signs of strengthening, supermarkets are likely to face growing competition from restaurants as consumers feel they can afford to eat out more often. To counter this, grocery retailers have been beefing up their offerings of quality foodservice products by expanding their delis and offering cafe-style seating for shoppers who want to dine in the store. Adding higher-quality prepared food products has created additional positions at some retailers.

To keep staffing levels affordable, retailers have become more prudent about how they use teams, so they don't "waste resources on problems that don't matter," says Kay O'Connor of StartingPoint LLC, a management consulting firm in Kansas City, Mo.

CEOs identify the most effective strategies for managing the leadership pipeline

How effective are the following options at developing your leadership pipeline?

Base: US: 167; Global: 1,330. Respondents who stated 'very effective' or 'somewhat effective.'
Source: PricewaterhouseCoopers "16th Annual Global CEO Survey," January 2013.

When executives call together groups of employees to address the more "nasty problems," O'Connor says, senior leaders need to be very clear about what is to be fixed, what measurable results are desired and how long the team has to work. Digital tools, such as online project management and video conferencing, can help teams get the job done effectively and efficiently.

Throughout the food industry, much of the new hiring is in customer relationship marketing, where talent acquisition has "accelerated at light speed," Frey says. Retailers are working harder to learn what customers want so they can cater to their needs.

Middle managers have a growing role in customer relationship marketing and effective team management, and the hiring landscape for talent at this level is becoming more complex, reports Ethan Mollick, a professor of management at the University of Pennsylvania's Wharton School of Business. "As opportunities multiply, people who have figured out how to succeed and market themselves are harder to retain," he says.

Effective Middle Management

Mollick recommends a shift in thinking about talent acquisition at the middle-management level. First, they should aim to hire the best people, Mollick says. Strong middle managers stimulate staff to identify innovative ideas at the store level, where they often originate with customers, and they must figure out which ideas to pass up the line and which to fight for.

The problem is, the people who can do all of this best are often difficult for employers to hold onto. Many retailers "can't pay to retain the very best," Mollick says. He recommends companies keep employees' career life cycle in mind and position themselves as good stepping stones for top-quality talent by learning "what people want to have on their resume" and providing it. If employees get better jobs after working for a particular company, that company will develop a reputation of hiring the best talent–and it will begin to attract the best candidates as well.

The PricewaterhouseCoopers report indicates most U.S. CEOs said they were developing future leaders by encouraging managers to be involved in strategic decision-making and succession planning. In addition, 64 percent had programs in place to encourage diversity among business leaders.

Digital Developments

The greatest competition for talent in the months to come is likely to be in the digital realm. A 2013 Okamura Consulting report for the National Retail Federation suggests increased investment in e-commerce and IT talent, but also says the distribution of these employees within organizations is changing.

Retailers will ideally place "dedicated digital integration specialists inside other teams," including marketing and store operations, the report says.

Cernauskas of Irv and Shelly's FreshPicks, who managed compensation for a Wall Street investment firm during the 1980s and 1990s, recommends not waiting until the economy "is really humming" again. "It takes time to get new people on board," he says. Companies that wait will be "behind the curve."

Meg Murphy-Sweeney is a freelance writer, editor and online content manager at Amberley Communications in Chicago.