ReimagineHR: Gig Economy Strategies for Mobilizing Talent Inside Your Organization

ReimagineHR: Gig Economy Strategies for Mobilizing Talent Inside Your Organization

When we think of the “gig economy,” we usually think of platforms like Uber, Deliveroo, Fiverr, or Freelancer.com, which offer users flexible, contingent work on a piece or project basis. Taking a broader view, however, the advent of the gig economy has also had an impact on the way traditional employers think about meeting their talent needs. In our research at Gartner, over the past several years we have seen a number of organizations experiment with new models of hiring, engaging, and assigning workers, inspired by the gig economy. At our ReimagineHR event in London last week, Gartner Practice Leader Thomas Handcock walked HR leaders through several of these models and discussed how they might leverage them in their organizations as well.

Internal Career Marketplaces

Compelling career paths and opportunities to learn and grow within the organization are increasingly important aspects of the employee value proposition, particularly—though by no means exclusively—for Millennial employees. The stereotype of the Millennial job-hopper reflects the notable desire among employees of this generation for a greater variety of experiences in their careers. If your organization can’t offer employees this range of experiences and opportunities to acquire new skills, they are likely to seek them elsewhere: Lack of development opportunities is among the leading drivers of attrition for employees worldwide, Gartner’s Global Talent Monitor data show.

To address this demand for development and variety, innovative employers are making it easier for their workers to find their next job within the company rather than outside it, through internal career marketplaces. These marketplaces, which at companies like HCL Technologies operate through digital platforms, can help employees plot their career paths and understand what internal moves they need to make to reach the position they desire. This allows them to develop their careers more rapidly or grow in new directions more easily without changing employers. For the employer, these internal labor markets offer an effective way to retain and develop high-potential employees. Internal hires for new roles also require less onboarding and come with the benefit of pre-existing institutional knowledge and alignment with the organization’s culture. (Gartner Corporate Leadership Council members can learn more about HCL’s Career Connect portal in our case study.)

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Internal Candidates not Filling Skills Gaps? You Might Need a New Strategy

Internal Candidates not Filling Skills Gaps? You Might Need a New Strategy

Qualified internal candidates are often overlooked in favor of outside hires, Wade Burgess, vice president of LinkedIn Talent Solutions, observes at the Harvard Business Review—and being overlooked for a promotion is a significant driver of attrition. Burgess has some theories as to why this is happening, foremost of which is that hiring managers don’t see their internal candidates as having the right skills:

Hiring managers think existing employees lack the exact skill match they’re hoping to find, or hiring managers are looking for newer skills that aren’t in evidence yet at their organization. Here’s a common scenario when it comes to the former: A hiring manager shares a healthy list of job requirements and asks their recruiter to find someone who fits the bill. But it’s tough to find candidates whose skills fit precisely, especially given the pace of change today. Skills evolve and emerge so rapidly that unless you have an organization-wide focus on professional learning and development, it’s unlikely that your team will be able to perform their day job while staying current on the latest skills — especially when it comes to tech-focused roles.

Jobs themselves are changing quickly, too. As the World Economic Forum notes, “Jobs exist now that we’d never heard of a decade ago. One estimate suggests that 65% of children entering primary school today will ultimately end up working in completely new job types that aren’t on our radar yet.” That’s already happening today. Consider professionals working as app developers, social media managers, or driverless car engineers. Five years ago, if a hiring manager had been searching for those skills in their workforce, they’d be hard pressed to find them. Yet somehow, people with no specific experience with those roles were able to tackle them successfully.

As it happens, my colleagues and I at CEB have been thinking a lot lately about internal leadership candidates and how best to develop them while conducting our latest research on high-potential talent strategies. Most organizations expect at least 40 percent of their senior leadership roles to look significantly different in the next five years. In an environment where leadership requirements are changing faster and in more unpredictable ways than ever, organizations’ high-potential strategies are trying—and largely failing—to hit a moving target. One common strategy is to try and hedge against future skill gaps by rotating potential leaders through different jobs to diversify their skills and experience and improve their agility to cope with changing leadership requirements.

Development is undoubtedly an important component of any HIPO strategy, but our research finds that this particular strategy is not as successful as many believe.

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What’s Behind The Rise of the Outsider CEO?

What’s Behind The Rise of the Outsider CEO?

Last month, we highlighted Strategy&’s 2015 CEO Success study, which showed that while most companies still prefer to promote CEOs from within their own ranks, a growing number of organizations are turning to outside candidates to fill open chief executive roles. Now, at Strategy+Business, the study’s authors DeAnne Aguirre, Per-Ola Karlsson, and Gary Neilson discuss their findings in more depth:

Discontinuous change is the principal reason that more companies are turning to outsiders. Some industries, such as energy, are reeling from large and unusual swings in supply, demand, and prices. Others, such as telecommunication services, are moving from an asset-intensive to a consumer-intensive business model. Industries such as utilities and banking are adapting to major changes in regulatory policies. And in nearly all sectors, companies are rethinking their business models in reaction to the rise of digitization.

Companies that find the context in which they operate changing so rapidly often need leaders with experiences and skill sets that are different from the ones that can be found within the company’s current management ranks.

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Outsider CEOs Are Becoming More Popular

Outsider CEOs Are Becoming More Popular

In general, large organizations tend to prefer internal candidates when recruiting a new CEO, yet the 2015 CEO Success study from Strategy& finds that 22 percent of planned successions at large, global public companies over the past four years brought in an outsider, compared to 14 percent in 2004–2007. The study found that outsider CEOs were more likely to be hired in industries experiencing disruption, and if the company was low performing, the chairman did not have CEO experience in the same company, or the former CEO was also an outsider.

Harvard Business Review senior editor Curt Nickisch talks to Gary Nielson, one of the authors of the report, to find out more about this trend:

That helps explain why 38% of incoming CEOs in the telecommunications industry during the previous four years were recruited from outside the company. Other industries with relatively high rates of outsider CEO hires include health care, utilities, and energy. An external hire, with experience in different competitive landscapes and unburdened by a long history and tangled relationships within the company, can have an easier time driving major changes.

The threat of activist investors pushing their own external candidates also appears to be encouraging corporate boards to look past the strong internal candidates they’ve been grooming. “We’ve spent a lot of time with companies that are worried,” Nielson says. “Chairs are saying, ‘You know, let’s get out in front of the problem before we have a Wall Street Journal[–reported] boardroom coup.’”

A more sobering statistic from the Strategy& report is that only 2.8 percent of new CEOs in the 2012–2015 period were women, but Nickisch is hopeful that the “growing comfort among the largest public companies with hiring chief executives from outside may improve the prospect of more women CEOs in the future”:

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Millennials Want Different Experiences, Not Different Jobs

Millennials Want Different Experiences, Not Different Jobs

Studies proclaiming that millennials change jobs frequently seem to be coming out more frequently than millennials actually change jobs. Here’s CNN Money‘s Heather Long on the latest one:

A new study by networking site LinkedIn found that young people really do change jobs a lot more than their parents did. The new normal is for Millennials to jump jobs four times in their first decade out of college. That’s nearly double the bouncing around the generation before them did. The so-called Gen Xers who graduated college from 1986 to 1990 averaged about two job changes in their first 10 years out of college, LinkedIn found. Today’s college grads don’t just change jobs, they often switch into entirely different industries.

The issue with all of these findings is that they offer an enormous amount of hand-wringing about the world coming to an end thanks to unsettled millennials, without any suggestion or insight about what to do about it. When you take a step back and ask the question, “Why do millennials change jobs more frequently?” (rather than just fretting about the fact that they do), you can actually get to a solution.

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The Insider’s Edge in CEO Recruiting

The Insider’s Edge in CEO Recruiting

Earlier this month, Joann Lublin reported for the Wall Street Journal that most large organizations that appointed new CEOs last year had opted for an internal candidate:

About four of five companies in the S&P 500 that chose a new CEO last year promoted an insider, according to a report by executive-search firm Spencer Stuart that provides a snapshot of what it takes to become a corporate leader nowadays. That is the highest proportion of internal appointments since Spencer Stuart began tracking CEO transitions at big businesses in 2004, and represents a 20 percentage-point jump since 2012.

Spencer Stuart connected this shift to boards getting better at CEO succession planning. “Boards,” Lublin continues, “now want leaders with a range of experiences, including working abroad, cross-functional roles and public-company directorships.” That squares with our own work on Enterprise Leadership, in which we found that due to the increasing complexity of most organizations, effective leaders need a holistic understanding of how they work, which favors insiders who have spent significant time in the organization.

This trend also raises an interesting question for me about whether a career at one company is becoming something of a luxury for the “1 percent.” The conventional wisdom is that nobody entering the workforce today can reasonably expect to spend 30 years at one organization like their parents did, but perhaps for the chosen few, that actually is the path to the CEO’s office.

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