Is Your Talent Pipeline Clogged?

 -  5/9/10

  Return to: http://diversity-executive.com/articles/view/is-your-talent-pipeline-clogged/

To many of us, the following story is not an unusual scenario. An executive team seeking to fill a senior leadership position reviews a diverse slate of candidates. After several discussions and interviews, the job goes to a middle-aged white male candidate, who happens to be the most qualified person for the job.

In private conversations with diversity practitioners, we speculate about the reason behind this common occurrence. A few will say the problem is there simply aren’t enough talented, diverse candidates. But others will quickly point out the abundance of women coming out of college with degrees.

According to a Nov. 11, 2009, NPR Morning Edition report, almost 60 percent of B.A. degrees today go to women. And what about the growing ranks of women and minorities who are now completing postgraduate degrees?

According to the Spring 1999 Journal of Blacks in Higher Education, top U.S. business schools produced more than 10,000 black MBAs in the 30 years prior to the article’s publication, and most of these held good positions in major U.S. corporations. Also, according to recent U.S. census figures, the number of blacks age 25 and older with advanced degrees, including MBAs, went from 717,000 in 1997 to 1.2 million in 2007, so it’s likely those 1999 MBA numbers have increased. Further, the large memberships of associations such as Black MBA, Hispanic MBA and others offer evidence that the talent is out there. Yet we can still count the minority and female CEOs of Fortune 500 companies in the U.S. on two hands and a few toes from one foot. So what’s the problem?

Legacy Factors Produced the Current Leadership Pipeline

“The biggest reason behind the predominance of white males in top leadership positions in the biggest companies in the U.S. is this rich pipeline of white male talent we see today was groomed and developed years ago, when women were not as visible in the workforce, civil rights was still an ongoing battle (which actually continued way after the passage of favorable legislation), and many of the recent immigrants that make up a large portion of the growth in the non-white male workforce had not yet made their way into the country,” said Fariborz Ghadar, director of Penn State’s Center for Global Business Studies.

When Ghadar talks about this current pipeline of white male talent having been groomed, he is not just referring to people getting their undergraduate or MBA degrees. He is referring to the opportunities companies provided to individuals over the course of several decades, such as a variety of assignments, exposure and increased responsibility, which enabled the most talented of this cohort to develop the experience, skills and credibility to rise to the top. It was this grooming and development that made them the attractive, well-rounded candidates they are today versus many in the untested pool of more diverse talent that now follows them.

David Love II, global practice leader for Stanton Chase International, said this is at the heart of the challenge. “There are lots of newly minted talents from formally underrepresented groups that make up the talent pool today and an abundance of organizations out there like Black MBA, Hispanic MBA and others that help companies and their internal recruiters to find these talents for future top positions,” he said. “[Unfortunately,] organizations looking for a top senior leader for an immediate post are not looking for newly minted talents. They are looking for people with a minimum of 15 to 20 years or more of very senior executive experience and exposure.”

In recent years, a number of organizations seeking to be more inclusive have begun to extend more development opportunities to members of this new, more diverse talent pool. These companies have launched employee resource groups to support this development because the legacy mechanisms used to develop white male talent may not be as effective when developing formally underrepresented talent. Take, for example, the development of women. In an article containing excerpts from her book No Ceiling, No Walls, author Susan L. Colantuono wrote that many corporate leadership development programs focus heavily on interpersonal skills — which men often need help developing, but women generally possess already. On the other hand, she said these programs do not provide enough of the business savvy in which women are usually rated as underperforming relative to men.

Today’s Big Challenges

In differential calculus, an inflection point is a point on a curve at which the curvature reverses its direction. For example, a curve changes from being curved upward to being curved downward. In terms of talent, that inflection point is taking place today, as the percentage of white males that historically comprised the largest percentage of the talent pool is shrinking relative to the growing pool of females and other formally underrepresented groups. Combine this with the following factors to get a better picture of the challenges facing talent supply:

  • The rich talent pipeline of white males we see today who were groomed and developed 25 to 40 years ago are now in their 50s, 60s and 70s. As these men retire, rewire or otherwise leave the day-to-day running of companies to do something else, who will replace them? Replacements will need to come from the more diverse pool of talent that includes women and various ethnic and racial groups as well as younger white males.
  • Business-to-consumer companies increasingly need diverse perspectives in key business decisions to ensure they connect with their ever more diverse consumer demographics. For example, women are increasingly making most product- and service-buying decisions.
  • For a diverse workforce at a business-to-business com-pany to remain relevant and connected to the new institutional buyer demographic, it must look for partners that understand its clients. Companies such as Wal-Mart, MGM and Disney want to have partners who understand their clients.
  • There is an increasing need for a cosmopolitan workforce and leadership to address the opportunities and challenges of the age of globalization. Asian companies doing business in the U.S., and vice versa, need people who straddle both cultures.
  • All people across all dimensions of diversity need to learn from one other to increase the diversity of perspectives in an increasingly global diverse talent and business market. Diversity of perspectives can be acquired by anyone through open and respectful interaction with people who are different from us.

This list is hardly exhaustive, but it makes the point. Organizations today are retooling their talent identification and development models to produce the next generation of leaders quickly in order to get in front of this curve. As Ghadar said, “Companies today are like a python that satiated its hunger and met its needs by swallowing one giant bear a long time ago. Today, however, the bears are smaller and the competition has increased and changed. In order for the python to survive as the remnants of its last meal are exhausted, it has to learn quickly how to thrive on a new diet.”

Smart Companies Retool Their Diets

Given the fast-moving river of changing demographics and business dynamics, here are a few examples of what companies are doing:

  1. Make sure entry-level executive positions are seeded with a diverse pool from internal or external sources. By broadening outreach efforts and relationships, recruiters and managers focus on finding the best candidates across all dimensions of diversity — female, African-American, Hispanic, white male, over 50, under 50, LGBT, disabled — especially for the key entry management levels that lead toward the top spots.
  2. Make sure people facilitating formal talent review processes receive adequate training in inclusiveness and objectivity. This will ensure unconscious biases never get in the way of recognizing top talent that meet job requirements across any and all dimensions of diversity.
  3. Expose new talent to the broadest array of company experiences as quickly as possible. By proactively putting newly hired talented people in a variety of business models, locations and functions, these hires are provided with an opportunity for fast-track learning and development. The highest performers will garner support from a broader base and get more opportunities to develop their strategy and leadership skills.
  4. Encourage mentoring across the workforce. This is valuable for everyone involved. As the diversity of the workforce increases and mentoring relationships are forged between people from different social identities — in addition to the traditional benefits of mentor-protege relationships — these interactions enable both parties to learn how to work together productively as parts of today’s increasingly diverse teams.

Ghadar said companies that do not take these actions now will find themselves poaching talent to offset scarcities in the quantity and quality of talent in their narrow pipelines. Cost-per-hire calculations will vary by company depending upon cost structures, regions of operation and the level of the position they seek to fill.

For example, the Saratoga Institute’s cost-per-hire calculations include advertising fees, agency fees, search fees, travel cost incurred by recruiters and applicants, bonuses paid to the person recruited, relocation costs and the cost of the recruiter’s time. And there is no guarantee the new leadership hire will be successful, so the true calculation may include the cost of testing the unknown and having some failures until the right fit is found.

Compare that with the more modest cost of providing leadership training and opportunities to build experience to a known performer, and most of us intuitively know the cost of poaching will be higher than developing and leveraging internal talent, much like the cost of selling to a new customer is higher than selling to an existing client.

So, yes, there is a great deal of diverse talent out there. And, as each year passes, workforce diversity increases. If diversity leaders haven’t started yet, now is the time to retool corporate systems for top efficiency running on tomorrow’s fuel supply.

Joe Santana is senior director of diversity at Siemens. He can be reached at editor@diversity-executive.com.