Everyone in the business world is ready to pounce, once they know it is safe, on fast growth stocks and other investments.  We all want our money to grow and work for us and not decline like so many have seen over the last year.  I have a hot tip ( hopefully not seen as insider trading) for anyone willing to step out and make the commitment.

The investment is known as human capital, your company’s employees.  There is no other asset a firm can have that will have a greater impact on their business than the people who actually do the work.  We sometimes forget that fact.  Solid employees who are committed, well-trained, and have a solid work ethic drive your profits up and have a positive effect on the results of others around them.  Just look at some examples I’ve seen over the years.  Broadcast.com, a small video conferencing company in the 90s, had a great idea that was new to the business world and the technology was literally being developed as they were marketing the service.  Those people worked LONG hours in the Deep Ellum area of Dallas with no guarantee that anyone would buy this new service on the “Internet”. In a short amount of time, Mark Cuban (now know as one of the richest men in America and the owner of the Dallas Mavericks) converted their hard work and commitment to a gold mine for all of those who used their talents to help the company succeed.  Not only did he profit as an owner, but all individuals involved profited when their company was purchased.  Other firms that come to mind where the employees had a direct impact on the company success are Microsoft, Apple, Google and The Container Store. In each case people who started in a role of just bringing their individual talents to the table helped the company succeed.

Another advantage to investors today is cost/value.  The talent available today is 20-40% less in cost than just 3 years ago.  A web designer with 5 years experience in 2006 could expect to make $70-80k a year in salary.  Today, someone with the same experience and skills will make $50-70k.  Many firms in order to keep their staff in place during this economic turmoil, have reduced salaries across the board 10-20% on average in order to avoid additional layoffs.  As an investor that is an immediate savings to you in securing new hires.

As with any investments, there are risks, namely making sure your hires are solid and meet the skills you require.  A bad hire or an under-achieving hire can be costly in salary, training and lost productivity.  That is why a solid recruiting partner, like Paladin, not only helps make strong investments in your human capital, but we also share in the coaching, training and ongoing assessment in your potential growth and challenges.

Any investor who ignores their human capital portfolio is destined to see losses.  Those who focus on hitting now while the costs are down and the resources are huge have a tremendous opportunity of significant growth and longterm security.  Just a thought for you investors to ponder.

Five to seven years of experience is the magic number. I recently spoke to the director of a mid-sized agency in Milwaukee at a BMA event.  He had a growing agency and needed to build his account service team. However, he had hit an impasse.  He could not find anyone with the 5 to 7 years experience he desired.  It is a conversation I have had with countless agency and corporate clients.  I thought I would share my thoughts on the topic here. I hope it is helpful in framing the issue and brainstorming potential solutions.

Here is my analysis in a not-so-small nut shell:

• Why 5-to-7’s have been the magic number
• Where did all the 5-to-7’s go?
• How this shortage negates the 5-to-7 magic
• Why these 5-to-7’s are even more magical
• Alternatives
• Light at the end of the tunnel
• Another tunnel after that
• Rethinking hiring

Why 5-to-7 is the magic number

For decades HR and hiring managers have gravitated to this candidate profile to build the bedrock of their teams.  5-to-7’s bring a mix of the positive aspects of both junior level go-getters and seasoned senior pros.  Here are just a few of the elements 5-to-7’s bring to the table.

• They are pre-trained with low ramp-up investment or time.

• They have been around the block (at least twice). They have real-world experience in the profession or industry.

• They have a level of business acumen and are able to navigate within systems.

• They have a track record that can help predict how they will produce in the future.

• They have started to develop a network of colleagues and resources.

• They are still open to learning.

• They are still climbing and striving to advance in their careers.

• They are entering a life phase (Marriage? Kids? Going back to school?) that would foster retention. They want stability and to grow with a company.

• They have held or could begin to take on management roles.

• There are generally lots of candidates within this experience range.

• And let’s not forget . . . 5 to 7’s salaries are generally lower than more senior level staff.

Sounds great, right?  It is. And it has been a very successful strategy.  But it isn’t working as well right now. Why?

Where did all the 5-to-7s go?

Like a scene out of “It’s a Wonderful Life,” the answer is…5-to-7’s were never born.

Actually, they were born; they just couldn’t get a job in marketing or advertising.

Think back to 7 years ago.  If you graduated with a degree related to marketing, creative or communications in the year 2002, you were more likely to be a barista than a junior copywriter or marketing assistant.

Classically, each year has a big cohort of recent grads who are hired together. They learn the business from the bottom up. Some are weeded out. Some decide to try other careers. The ones that thrive will have paid their dues, learned the biz, and “apprenticed” under a solid structure of management. They are ready to take the next career step.

For this to work, you need a large “freshman class” of junior candidates.

After the dot.com bust and 9/11, the economy hit a wall. Marketing, creative and communications professions were hit disproportionately hard. Struggling to retain the staff they had, companies simply could not afford to hire new grads and invest the training and vetting time. They had to use the work horses they could count on (yep – the 5-to-7’s of the day).

So, smaller cohorts then mean a smaller pool of 5-to-7 year candidates now.

How this shortage negates the 5-7 magic

HR and hiring managers still want to follow the tried and true practices of the past. They want their 5-to-7’s and they want them now!

But no amount of protesting to Clarence the guardian angel will allow us to go back in time to boost the 2002-2004 cohort. Government 10 year employment stats

The total population of that group is smaller. We are competing for fewer people. But that is not all: the current 5-to-7’s are fundamentally different from the classic 5-to-7’s.

How this cohort is different:

• Not all 5 to 7 years are equal.  Some individuals with 5 to 7 years of professional experience did not have all 5-7 years within the related discipline.  They are not as seasoned in the role.

• Others are more advanced. Many of those that started in the early 2000’s were relied on to wear many hats and to take on responsibility earlier. Therefore, they are further along in their careers.

• The age/life stage sync is out of perfect alignment.  Many of these individuals had to delay their start in the profession. Therefore, they are older than the classic 5-to-7’s and at a different life stage.

• This group had to do more with less. Therefore, they tend to be strong generalists.

• Because they are in short supply and high demand, the current 5-to-7’s can command higher salaries.

Why these 5-to-7’s are even more magical

The 5-to-7’s who started their careers in 2002-2004 were able to gain solid experience. They worked in departments stretched to capacity. They were given opportunities well beyond those they would have had at other times. This may have included managerial experience, coordinating with cross-functional teams, and assisting with strategy. They also had a chance to simply do a lot of work at top speed to compensate for small staffs.

Therefore, when a company hires one of these 5-to-7’s, they are often getting a powerhouse of experience.

That company will also pay more for these super 5-to-7’s.

Alternatives

So, you are a hiring manager and you want to build a team. You want a 5-to-7 candidate. But you can’t find any that hit the mark. Their salaries are out of line with your budget. They have had either too much or not enough experience. They are unwilling to make a move from their current companies.  What do you do?

Think creatively. There is no reason to stay locked to this single strategy if it is not working for you.

• Hire a more experienced candidate.  Those with 10-15 years of experience may be a solid fit. They may also be more competitively “priced” with the 5-to-7’s.

• Hire multiple junior candidates and “grow your own” cohort.

• Hire individuals with experience outside of your niche.

• Restructure work to allow a different mix of workers, including freelance/contract specialists.

• Pony up the cash and adjust the pay grades to gain a superstar 5-to-7 employee.

Light at the end of the tunnel

After 2004, the marketing, creative and communications fields began to rebuild. That means we will have only a few years to wait for this trend to right itself.

The new group of 5-to-7’s is just around the corner.

Another tunnel after that

Looking ahead, we can see two trends looming in the future:

• The same issue will follow the 2002-2004 cohort throughout their career stages.  Therefore, HR and hiring managers will be wise to step up efforts to build succession planning for their mid- and senior-level manager positions within the next 10+ years.

• With the new economic woes of today, we can anticipate a potential reduction in the 2009-2011 entry level cohort, and therefore, a smaller 5-to-7 group starting in 2014.

Rethinking hiring

There are lessons to be learned from the upheavals in our profession over the last 10 years.

• Flexibility: Being able to veer from the tried and true path if it is not working for the organization

• Creativity: Making use of the talent and skills available

• Development: Fostering and retention of the talent we have in our teams and in the profession.

I just received this article from BLR’s:  “HR Strange but True Newsletter” and wondered if you wanted to share your “Biggest Turkey” ever hire story in honor of Turkey Day next week…

A recent survey asked hiring managers to describe the “biggest turkey” they ever hired. The responses should leave no doubt as to why they considered the employee a dud.

While hiring is a rarer bird these days due to downsizing, employers still seeking talent find hiring new people to be more daunting than ever.  “Turkeys” are still lurking in the applicant pool, according to a recent survey by Caliper, an international management consulting firm.

The October 2008 survey of 190 hiring managers found that 69 percent of respondents find it easier to work with “the devil they know” in poorly performing employees rather than taking a chance on an “unknown” new hire. Just 31 percent of those queried find it harder to manage the people they have than to select new employees.

For some employers, these hiring concerns have proven to be well founded. With Thanksgiving fast approaching, Caliper asked managers to describe the “biggest turkey you ever hired.” Among the responses:

• “A fellow who, after 1 week on the job, asked to go to Florida. We said no, so he called in sick for a week and then came back with a tan!”
• “We hired someone who could barely do a single task.”
• “We hired a woman and the second day on the job, we found her taking a nap in the office of the CEO.”
• “One gentleman came in late, left early, then told me, ‘I’m going to be sick tomorrow, so I won’t be in’.”

“In difficult economic environments, people are a company’s most powerful competitive advantage,” said Herb Greenberg, Caliper’s founder, president, and CEO. “Every new hire provides a precious opportunity that employers don’t want to squander. This adds to the pressure to ‘work smarter’ in the hiring process and to avoid the costs of a poor decision.”

1. Be strategic (or “Keep your cool even if everyone else is losing theirs”).

What matters most to your organization? Your job is to figure out your “secret sauce,” and make sure that that is the last place where cuts are made.

2. Know what you can and can’t affect (or, “Don’t tilt at windmills”).

Realize that there is no way that you alone, can materially impact the overall economic cycle or the march of technology. On the other hand, you can affect how you manage your expenses and how you learn about and react to changes. Worrying about the future is inevitable, but don’t let it immobilize you.

3. Move quickly and decisively (or “Fish; don’t just cut bait”).

Businesses have to make money (even nonprofits need operating surpluses to maintain operations). If you look at your budgets and you’re at a deficit, you’ve got two choices: Act quickly to fix it so you can be ready and able to go on, or act slowly and prolong the pain. The latter may seem more palatable as you first survey the scene, but it rarely works.

4. Keep your personal life under control (or, “No one ever died thinking they hadn’t spent enough time worrying”).

This is very stressful stuff. You have a lot to do; you have to do it quickly; and you often have to hurt good people whom you value. But that’s the easy part. The hard part is dealing with the feeling that you aren’t in control. Events are driving the train. You are just an unhappy, unwilling passenger.

The feeling that you are not in control is what causes the stress. (You may think it’s all the work you’ve got, but consider: You’d be just as stressed if the world was collapsing and you had nothing to do.)