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Why Retraining Is the New Recruiting and the Key to Future-Proofing Your Workplace

In the last couple of years, a new wave of digital disruption swept through businesses in nearly every industry. In 2017, Amazon opened its first supermarket without salespeople in Seattle. McDonald’s decided to replace all of its cashiers with self-serve kiosks, and Caterpillar now invests in driverless tractors.

As more industries go digital and accelerate the need for talent, the skills shortage problem becomes acute. PayScale’s research on compensation best practices found that 33 percent of companies worldwide had positions that have been open for six months or more. When we asked HR and business leaders why these positions remain unfilled, 67 percent of them said it’s because they could not find qualified applicants.

PayScale’s research found that 33 percent of companies worldwide had positions that have been open for six months or more.Click To Tweet

In light of the tight talent market and the increasing competition for tech jobs, a number of businesses have started offering retraining programs to their employees. TechCrunch reporter Percia Safar recently wrote a piece arguing that retraining the new recruiting:

In the increasingly competitive market for talent, tech companies are leading a new type of labor innovation: retraining is the new recruiting. Although investments in computer science and vocational schools will be invaluable in the long run, retraining offers a more immediate solution.

If you’re still unconvinced about the need to retrain your employees, consider the following stat: Pew Research found that sixty-one percent of Americans under 30 expect that it will be essential to develop new skills at some point in their careers. Meanwhile, during the latest college recruiting season, students started asking corporate recruiters whether companies will help them get new skills as jobs shift, says James Manyika, chairman of the McKinsey Global Institute.

If you’re not taking steps to future-proof your workforce, now is the time to start planning. To help you spark ideas on how you can make your employees smarter — and your organization more agile, resilient and competitive — we’ll highlight three recent stories about companies who are testing creative strategies to develop the talent they need. Then, we’ll wrap up with seven tips on what you can do to get started.

1. Box Turns Its Customer Support Team Members Into Solutions Engineers

Box is an enterprise content management platform that seeks to change the way businesses manage content and share files. At Box, VP of Sales Engineering Matt Norton found that the best recruiting pipeline for solutions engineers was not yet another job board, but Box’s own customer support team.

“Enabling employees from the customer support team to retrain as engineers allowed us to fill open technical roles faster and also retain the institutional and product knowledge our best-performing employees had already developed,” explains Norton.

By creating an internal pathway to filling in-demand positions, Box is able to mitigate the recruiting bottleneck and scale their teams faster.

2. FlexPort helps its employees develop hybrid skill sets to take on stodgy industry incumbents

FlexPort is a startup that wants to disrupt the shipping logistics industry by using both people and software to manage the complexity of international trade. Recruiting is a particular challenge for them because they need to find workers who are sophisticated technologists and who understand the nuances of the freight industry.

Flexport CEO and co-founder Ryan Petersen explains, “We could not just go out into the recruiting market and hire the ideal candidate, because in many cases those people did not even exist.”

During the initial phases of building his company, Petersen spent many days creating robust training initiatives that would enable employees to gain technical skills and become experts in the freight industry.

“This hybrid skill set within our company is what now allows us to take on companies that are 10-15x our size,” says Petersen.

 3. AT&T undergoes massive talent overhaul

AT&T is taking the ultimate long view on talent management. There are now several case studies discussing the company’s ambitious talent transformation in great detail (including these by HBR and Fortune). The story is still in the making, and it’s definitely worth watching.

In short, over the last few years, AT&T has felt like it’s had no choice but to make large bets on new businesses. As an example, from 2007 to 2015, data traffic on AT&T wireless network grew by more than 150,000 percent. The company forecasts that by 2020, 75 percent of its network will be controlled by software-defined architecture. That percentage was near zero in 2000.

Essentially, most of AT&T’s global employees “signed up for a deal that is entirely different from the environment in which their business operates today,” says John Stankey, the head of AT&T’s entertainment group. The company needed workers who are skilled in cloud-based computing, coding, data science and other technical capabilities. These fields are advancing so quickly that traditional methods of training simply cannot keep up.

Since 2013, AT&T has spent $250 million on employee education and professional development programs and more than $30 million on tuition assistance each year. They estimate that 140,000 employees are actively engaged in acquiring skills for newly created roles. From January to May 2016, retrained employees filled half of all technology management jobs at the company and received 47 percent of promotions in the technology organization.

Here’s what AT&T has done to kick off this massive retraining effort (summarized from this HBR case study):

  • Identified the skills the firm would need and created a blueprint for sourcing them internally. Managers documented existing skill gaps and developed “future role profiles” for themselves and their teams. Every manager in the AT&T network and technology strategy organization (half of the firm’s professional workforce) was a assigned a new role and expected to get training or credentials to fill it.
  • Re-evaluated their org structure and re-aligned and broadened the roles: AT&T consolidated 250 roles across the company into 80. The simplified (and standardized) role structures would allow increased job mobility and foster the development of interchangeable skills. Each role became broader so that that staffing became easier and the company more nimble.
  • Simplified performance metrics to focus more directly on how individuals contributed to business goals. Recognized the market value of jobs. By increasing the financial upside of jobs requiring specific skills, the organization motivated employees to gain the new skills needed to step into these roles.
  • Raised the bar on performance. In AT&T’s Technology and Operations unit, for example, the number of managers receiving the two highest performance ratings on a five-point scale declined by 5 percent, while the bottom two ratings increased by 37 percent.
  • Re-designed compensation plans to de-emphasize seniority, added more variable compensation to motivate high performers, and put a dollar premium on in-demand skills.

To help employees with the transition, the HR department launched a self-service online platform, where employees can access tools and processes for performance management, career development and talent planning.

Even more important, AT&T shifted its mental model about talent development and career pathing. Instead of taking a one-size-fits-all, “only-way-is-up” approach, AT&T decided that each employee should become CEO of his or her own career path. Everyone should seek out new skills, roles and experiences based on his or her aspirations. The company believes this is in line with the demands of the wider economy.

In 2016, by the time HBR published its case study (three years after AT&T started this initiative), AT&T reported that it has reduced its product development cycle time by 40 percent and accelerated time to revenue by 32 percent.

Even if you don’t conduct a company-wide retraining program (and you may not need to), there are some smaller, practical steps you can take to ensure that your workforce has the skills needed to do the jobs your business requires today and in the next few years:

  1. Identify the skills your firm needs and create a blueprint for sourcing them internally. Get managers involved in this process and work with them to develop their ideal future job profiles. Then, work with managers to figure out how to create internal pathways to filling these new positions.
  2. Look at your organization structure for opportunities to create clearer career paths for employees. How many roles do you have across the company? Are there too many perhaps? By reducing the number of roles you have (and making more roles hybrid) you can increase job mobility and help your employees cultivate new skills. For example, if each role requires a person to be proficient in four things instead of just two, staffing projects would become easier and projects would be completed faster.
  3. Look at your performance metrics. Do they drive the behaviors you want? Think about creating performance metrics that focus directly on how individuals are contributing to business goals.
  4. Make sure you are recognizing the market value of jobs. In-demand skills should be compensated that way. When you ensure that there’s a financial upside for jobs with in-demand skills, employees will be motivated to gain these skills and step into these roles.
  5. Evaluate your compensation plan. Does it motivate employees to develop laterally and acquire new skills, or does it emphasize seniority? Consider de-emphasizing tenure, adding more variable pay to motivate high performers and putting a premium on in-demand skills.
  6. Give your employees opportunities to “wear more hats.” Are your employees able to work on cross-functional teams or across departments? By giving employees opportunities to work with colleagues they wouldn’t normally work with, or giving them a wider range of assignments, they get to utilize skills they don’t use in their primary role.
  7. Empower your employees to make decisions. If your employees feel comfortable in making in-the-moment decisions on behalf of the company, you’ll build a more nimble and resilient organization. Give your team frameworks for how to act in different situations, but allow them to use their own scripts to solve problems when unexpected challenges arise.

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How are you future-proofing your workforce? What types of programs are you testing? We’d love to hear from you! Share your experiences in the comments.

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