The U.S. economy is at an inflection point. It is a point of significant transition that has important implications for learning organizations, and the signs are all around us.
Ever since the financial meltdown in 2008-2009 it has been a buyers’ market in human capital. In 2012, Starbucks had 7 million applicants for 60,000 positions, while Procter & Gamble had more than 1 million applicants for 2,000 positions. The numbers are staggering, and not uncommon. For years employers have had the pick of the litter when looking for talent. Development has been secondary, but that is changing.
Two major shifts have occurred. First, the U.S. economy is largely healed. The Federal Reserve Board is scaling back its quantitative easing policy on buying U.S. Treasury bonds. At the same time, cutbacks in federal government employment are ending, housing is recovering and American corporations sit on mountains of cash. We also are rapidly becoming energy independent.
The other thing happening is baby boomers are retiring. Some estimates have the numbers at a rate of 10,000 per day. This combined with economic healing means the human capital supply-demand relationship is reversing.
Soon the cry that companies are having difficulty finding the talent they need will grow from the whisper it is today to a regular storyline on 24-hour cable news broadcasts.
So, about now in this conversation the logical question becomes: “What does this have to do with my learning organization?” The answer is, everything.
In a world of human capital where supply exceeds falling demand, retention is not that important. If they leave, you just recruit a replacement from thousands of qualified applicants. In a world where human capital supply lags accelerating demand, there is a whole different set of dynamics. In this new world, retention becomes strategic and more difficult. It is here that learning moves to center stage.
The direct benefits of learning to the organization have always been self-evident. The enterprise invests capital to create the knowledge and skills required to meet objectives. This historic charter applies and becomes ever more critical as the human capital supply-demand equation shifts. But now learning and development will also play a role in retention. It has to because in the world of growing demand and stable or shrinking supply, there is a greater risk that talent in your organization will be raided by competitors.
It has been widely assumed that learning and development increases the likelihood of turnover by making those receiving the instruction more valuable in the external market. This increase in human capital value is true. That is why you are doing the development in the first place. The goal is to make employees more valuable. So, why is it surprising that if they are more valuable to your enterprise, they would also be more valuable in the external market? But again, that is where retention strategies come in.
The real risk is that learning and development investments are being made out of necessity because of the radical shift in the supply-demand equation, not because organizations know what they need skillwise and are actively working to build those skills internally.
The forecast suggests the talent, skills and knowledge needed will no longer be available via thousands of applicants. Should CLOs pretend that market conditions have not changed, that no one in the market will notice and that the employees they have invested learning and development in will remain ignorant of the true market conditions? No. In the world of Twitter, PayScale.com and social media, this just is not going to happen.
The charter for learning leaders is to lead, to be an agent of change within their organizations. Advocate increased investment in learning and development to increase the needed skills and knowledge in the organization. Be proactive in the leadership discussion about how best to retain those with expanded capabilities.
Awareness of the shifting human capital supply-demand relationship has to become a common enterprise theme. The mantra has to be that market conditions are changing and that we have to stay ahead of them, not lag behind. In this emerging world, retention has to be part of the learning strategy, not an afterthought.
Michael E. Echols is the vice president of strategic initiatives at Bellevue University and the author of “Your Future Is Calling.” He can be reached at editor@CLOmedia.com.