Upgrade Your Talent During Economic Slumps

Kimball Kjar
Managing Principal Recruiter
Venator Ventures

It's been said that there's nothing good that comes from a down economy. We've seen in recent months trillions of dollars that have been lost to the downward spiral of an economy suffering from a credit crisis, a real estate recession and a war that is putting the government further in debt on a daily basis.

But as troubling times loom for many companies and their employees, there is a silver lining: upgrade your existing talent.

In the recruiting world we like to call an economic slump, an opportunity to upgrade your team. During such slumps talent is usually in over-abundance and "A players" are always keeping their eyes open in case their company, which might seem stable today, gives them the pink slip.

Smart and savvy managers will know the current strengths and weaknesses within their teams and they will know that they can usually, if not always, improve the employees on their teams.

Bottom line, economic slumps are always a "buyers market" for the best employees for those companies with the gumption to do so.

Let me give you an example. I'm an avid sports fan, sometimes much to my wife's chagrin. And last year basketball fans were able to witness one of the biggest "upgrade coups" in the history of the NBA.

Danny Ainge, GM for the Boston Celtics, saw two lowly franchises suffering from poor management and personnel selection and realized he could cash in on their lack of success. Using a bevy of negotiating tactics that included draft picks, current players and cash Ainge was able to upgrade his current team by adding former MVP Kevin Garnett and the sharp-shooting Ray Allen.

Both of the players' repsective teams--Seattle & Minnesota--were ailing from troubled owners and front-office management that together weren't offering championship opportunities to both Garnett and Allen.

For the faltering yet legendary franchise of Boston this was a dream come true. Three of the game's biggest players would join the Celtics and attempt to re-estalbish the franchise’s winning ways.

Well, if you follow the NBA or sports in general, we all know the story that followed. The Celtics went on to have one of the best records in the NBA last year and eventually beat the LA Lakers in the NBA Finals.

For Ainge and the Boston franchise, the trades for Garnett and Allen were a success. By letting go of existing talent and possible future talent through draft picks Ainge and the Celtics give us an example of what companies can look to achieve when things are tough: improve your company by upgrading the players on your team.

Seems simple to say, but it’s actually hard to do in practice. Here are some ideas of how a company can "upgrade their players" during tough economic times as pointed out by noted human resource consultant Dr. John Sullivan for ERE.net:

1. Begin by calculating the long-term economic consequences of keeping a below-average performer, compared to the increased performance level of an above-average performer (the difference is known as the performance differential). If you carefully calculate the dollar value of the performance differential between a top performer and the “targeted” below-average performer, you will often find that it’s two or three times greater, resulting in over $100,000 annual difference in output.
2. Next, multiply the costs of keeping a weak employee over the number of years that the bottom performer is likely to remain at your firm to get the total dollar value of swapping an employee.
3. Develop a formal plan and get the necessary buy-in from HR, performance management, and your recruiters. Be sure and run it by a few operating managers to identify any potential issues or concerns they might have.
4. Get the CFO’s buy in for the talent-swapping strategy.
5. If possible, get a business unit head to conduct a pilot and to “champion” the program among their colleagues.
6. Develop a process for identifying the key business units and the jobs within them where replacing below-average talent with top talent can make a significant impact upon the business. Talent swapping is not appropriate for every position.
7. Within those jobs, work with performance management and individual managers to identify the weak performers to target. Work with “legal” to see if there are any further actions that need to be taken before the employee is deemed eligible for a SWAP. Include a diversity component to ensure that diversity levels are maintained.
8. Define the minimum skill set (skills, capabilities, and experience) that the potential new hire must have to become “eligible” for a SWAP.
9. Develop a continuous sourcing strategy for the targeted positions. Also be aware that using traditional employee referrals to identify candidates might cause problems if employees realize that by making referrals, they are helping to replace an employee who might be a friend.
10. Begin building a “who’s-who” list of the names of the top talent in your industry who might be amenable to taking one of your targeted jobs.
11. Conduct “relationship recruiting” with these key individuals from the list. This might mean calling them occasionally, periodically sending them an e-mail newsletter, or inviting them to your company’s events.
12. When you become aware that one of your targeted candidates is now available, recruit them and offer them a position. If they accept your offer, you then notify the performance management function to begin the release process of the current poor performer. When appropriate, and especially in certain international locations, consider offering the released worker a financial severance package for signing a legal release.
13. Bring the new candidate on board.
14. Continue the process until you have substituted top hires for each of your targeted positions. Remember that you can also swap talent "internally” by moving top performers from low-impact to high-impact jobs.
15. Another option to consider is rather than waiting to release workers who are clearly bottom performers, instead shift them to a contract or contingency basis. This “temporary” status allows you to more easily release them if there is a need for a layoff, a performance termination, or a talent SWAP. If their performance improves, you can obviously shift them back to a more permanent status.
16. Run the metrics and then calculate the overall performance improvement and the dollar impact as a result of the improved performance of your new hires, compared to the released employee.

This is a long list, but one worth reviewing and thinking about. The thing you want to ask yourself first is 'are we in a position to make an aggressive play and improve our team.' If, by using the above criteria, it makes sense to upgrade your talent, then go ahead and pull the trigger.

Should you have any questions please feel free to consult any one us here at Venator Ventures.

Best of luck to you all and have a Happy Thanksgiving from Venator Ventures.