New Economy Rules

Chapter One - New Staffing Challenges  

The business world has changed. There are new problems, new circumstances and new challenges.  The historical solutions no longer apply. The number one challenge brought on by these changes is unpredictability. Unpredictability drives most managers and business owners absolutely crazy.

There are a number of factors contributing to the rise of unpredictability.  First and foremost, is the pace of change. The pace of change business owners and managers face today is much greater than it has been historically. We used to write five and ten year strategic plans.  Now we write five- and ten-month strategic plans because the pace of change has increased so dramatically. 

Most business models work because the market conditions and competitors are well understood.  By understanding assets, strengths and weaknesses, plans can be developed that offer the best opportunity to succeed. 

However in today's marketplace, competition has taken on a new face.  There are more and nontraditional competitors. Historically, competitors were easy to identify. There were half a dozen or so companies in your industry that were primary competitors.  It was fairly straightforward to follow them, plan and adjust as necessary. 

Today, competition is global.  New competitors that were never on the radar are very real.  Competitors are appearing from other industries as well.  Technology has enabled competitors by lowering the barrier to entry in many industries.  These non-traditional competitors are a major factor contributing to unpredictability. 

Another problem is the entire planning process has not adapted to the pace of change and unpredictability. The best example of this concept is the implementation of forward-looking versus historical issues.  

Most business planning makes use of trailing indicators.  The primary considerations have been historical results.  The most important data points have included: last month’s results, what was accomplished the year before and so on.  The two most obvious data points are sales and expenses. 

All of this information comes from trailing indicators.  It was achieved based on historical conditions. 

Trailing indicators are less effective when conditions are changing so quickly.   The strategies and tactics that worked so well previously may not be as effective given the new set of challenges. 

The result is that past business models may not work today or tomorrow.  

Leading Indicators 

Here are just a few of the considerations that need to be factored into your planning in the new economy: 

Pipeline Quality 

Your sales forecasts now become more critical given the changing environment.  Analyze the make-up and quality of your sales projections.  Specifically, look how each opportunity is aligned with your product or solution.  Look for compelling events as an indicator of the quality of the forecasted business.  And consider the key differentiators your organization brings to the opportunity. 

The quality of the sales forecast is a leading indicator.  The more reliable the numbers, the better the business plan. 

Customer Indicators 

The stability and make-up of a client base is critical to future planning.  What percentage of clients are repeat buyers?  The higher the number of repeat clients, the more reliable the projections.  This is a solid leading indicator of the health of a business. 

In addition to repeat customers, how loyal are your customers?  Satisfied customers become repeat customers.  Repeat customers are the most loyal customers.  The greater percentage of customers that are loyal, the more insulated the business against new competitors. 

These are just a couple of leading indicators that need to be a more integral part of the planning process if you are going to compete in the new economy. 

How does this apply to hiring?

It is not possible to succeed in the new economy without a winning business model.  A key component of a winning business model is the plan for human assets.  A good human asset plan includes not just how many people to hire, but also the types of knowledge, skills and behaviors the new employees need to deliver business objectives. 

And, the talent needs to be found, attracted and hired as fast as possible with the least amount of resources spent.  The old wives tale, "Hire Slow and Fire Fast" will definitely doom a business in the new economy.  Satisfying business needs slowly is a losing strategy. 

Here are a couple of specific examples of issues that must be addressed in the new economy to succeed at hiring.  

First and foremost, applicant pools are completely different. Massive applicant pools are now normal. Unemployment is at higher levels and will probably stay above historical levels.  As a result, more people are applying for jobs.  These new applicants are coming from industries that have gone out of business or don't exist anymore.  In addition, the fact that more people are transferring industries further complicates matters.  

The traditional model of "candidate" no longer exists.  Finding the right person is more difficult because there are more people available, and they may not be from the traditional direct competitor. 

Also, the pace of change forces a new and critical look at the employment relationship. In the ideal world it would be great to hire a person, have them stay for 30 years, and finally give them a gold watch. That world doesn't exist anymore.  

The employees who help solve today's problem may not be the right assets to solve tomorrow's problem. As a result, employment relationships need to evolve.  

This real-world situation requires a new paradigm about hiring employees.  It is time to treat the employee relationship in a completely new way.  

The only reason to enter into an employee relationship is so the employee can satisfy a business need.  View this relationship the same as any other business contract.  The business needs a result.  The employee wants a salary, benefits and an environment where they can succeed. 

Both parties have a responsibility to make the contract successful.  As long as the person continues to provide positive value to the company they continue to receive money and benefits.  This simple model keeps everything in perspective.  The contract ends if either side no longer performs their responsibilities. 

In the new economy, the employment relationship needs to be mutually beneficial.  The focus of the relationship needs to be clearly defined and in place only as long as both sides benefit. 

The new economy calls for new and different planning and a new employment relationship.