Is the Talent War Over?

Even in lean times, that elusive top 10 percent is not so easy to come by

By Elliot Clark

Is the war for talent over? Let me help all the doomsayers, naysayers, and soothsayers: No! The war for talent is not over. I have seen this sneaking into the press and economic conversation of late. We have seen more than 10 recessions and one depression in the last century, and during this time the “war” has been building.

Until McKinsey published its seminal study, “The War for Talent,” we had no catchy name for this phenomenon. Throughout the industrialization and the later shift to a service-based economy, specialized skills have been sought after. However, as we face the next recession, rising unemployment levels lead to another round of prediction about a truce in the ongoing battle for the best and the brightest.

To be fair, MBA salary growth has slowed, hiring is soft, and layoff reports mount, but hiring managers, CEOs and CHROs all know that even in an economic downturn, all companies are seeking the top 10 percent of the talent market in any specific job family. Arguably, productivity per employee is more important when the labor force reduces in a company.

The labor market is a cruel example of the march of time and the force of change. Twenty-five years ago, the most advertised job in the U.S. was keypunch operator. As computers shifted away from paper cards, this skill set vanished. Was this an end of the war for talent? No, it was merely a shift into other technology-driven careers.

In this article, we examine the world of pre-employment screening. Are these companies facing hard times as hiring goes soft? Yes, the transaction level will diminish, but their clients will still need to hire and will insist on pre-employment screening as a way to sift through the greater throngs of job seekers and identify the very best. For service-based companies, compensation is the largest line item in the budget, and this is true for some manufacturing companies as well. Pre-employment screening protects your human capital and production capital from the bad actors you may have hired.

Once again, the RPO industry will be affected by the clients’ uncertainty in predicting hiring volumes, but there is no probability that clients will suddenly drop their hiring standards. In fact, those of us who have lived through a recession have learned that hiring managers become pickier in lean times.

In every recession in the past 40 years, large companies shed employees in layoffs. A percentage of these disgorged employees start small businesses that begin to hire available talent. This process, in essence, allows small business to rescue the economy in a way that large companies cannot. The best and the brightest tend to be the business founders and do not reenter the big company labor pool after the recession. It becomes critical for companies to use good performance management and retention techniques to attempt to preserve this layer of talent rather than let it leave. It also becomes imperative following the recession to get as many back into the company as you can afford, identify, and recruit. The boom after a slowdown is always a scramble for that elusive top 10 percent. So, no, the war is still ongoing.

So while the next few quarters may be soft for screening and RPO companies, selectivity never goes away and the competition for the best players will be unabated. The War for Talent, regardless of what you may be hearing, is not ending and it probably never will.