“He said it was MY fault. You’ve got to love engineers because they are so direct.”
This comment came from a CEO friend of mine (let’s call him John) talking about a historical decision they made that is hindering their business today.
A decade ago, this large manufacturing and building company was hit by the recession. Faced with slowed growth and contracting market conditions, the leadership team needed to reduce expenses through reductions in force.
Today, the company is missing out on business because they don’t have the engineering capacity to keep up with demand. The backlog for design is too long. Engineering experience is a key driver for success because they provide custom design of sophisticated commercial buildings.
Back to the conversation.
“Your fault?” I asked.
“Yeah, so I’m talking to our VP of Engineering and pressing him on our backlog, and he tells me it’s all my fault.”
He asks, “Remember when we were struggling in the recession? The executive team, you, decided to do layoffs. You did the ‘right thing’ in keeping the senior engineers with all the experience, seniority, and who have been loyal to our company. You laid off the younger, less experienced engineers.”
He went on, “Today, those senior engineers are retiring. I’m going to retirement dinners regularly.”
Then he drops this truth bomb, “Now we are short on experienced engineering resources and we can’t train them fast enough. Those bright young engineers we put out in the street 10 years ago would be today’s leaders!”
“How did this happen?” I asked.
“We added automation and optimization with design software and 3D modeling, which takes fewer people, so we didn’t backfill with headcount as the industry rebounded. As a result of the recession, we became more efficient. There was no need to hire more engineers. Now, our team consists of bright young kids who do good work but don’t have the experience to do complex projects for some of our key customers. We are losing jobs during this building boom simply because we don’t have the design resources support our factory.
John paused. “There are a ton of lessons in here about decision making and their long term effects.”
I agreed. Here are four ideas to think about as you look at your decisions regarding people and talent.
1.Every decision you make today has long-tail effects
As part of your planning and discussions, it’s essential to look into the future to see where the risks and rewards lie when making significant strategic decisions. You won’t know exactly how things will play out, but just by having the discussion you’ll have mitigated risk and have a better understanding the impact.
2. Balanced Talent Pool
When it comes to employees, you need a balance of senior-level, growing, and new talent. A healthy balance of multiple generations in your workforce will raise the level of all players and provide your company with a continuous supply of talent at all levels.
3. Name your Replacement
Everyone should have an answer to the proverbial “hit by the bus” question. If it’s a key position (C level, VP, etc …) then the exec should be able to name specific candidates that are high potential for the job.
You to CEO! If you can’t see or name your next topmost leader, then you are one tragedy away from crippling your company.
4. Integrate Talent Development into your Culture and Performance
Best Buy has a documented rule: No one gets promoted unless she has a trained replacement. Many companies make employee development a part of performance reviews, evaluating the bench below as well as the employee herself.
What decisions are you making today that need a long-term lens? What part of your organization needs assessing when it comes to the talent pool?
What you decide today will affect your future. Talk about it and create a plan to help mitigate your risks and maximize your potential for growth.