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Consider the following:
• In a recent survey of employees by WetFeet.com, more than one-third of the employees polled said they are very happy in their current job; these same employees also said they are interested in finding out about other job opportunities and would be willing to move within six months.
• In a survey of MBA students worldwide conducted by PricewaterhouseCoopers, students said what they wanted most out of their first job was "a good reference for their future career." In the same survey, only 20% of those polled said they expected to stay with their first employer more than five years.
• General Electric last year announced that from now on, half of their new hires would be people the company had already employed as interns, co-ops or workstudy students.
• In April 2001 employers said they expected to hire 19% more college graduates than the year before; by September 15, they expected to hire 20% fewer graduates.
What all this points to, says Peter Cappelli, director of Wharton's Center for Human Resources, is the emergence of a dramatically different labor market that is changing not just the way people are hired and fired, but also how they view their jobs, their employers and their careers.
Speaking at a Nov. 19 executive education forum on "Managing in Tough Times: Perspectives on Leadership and Change," Cappelli told executives in human resources and leadership development that changes in the labor market are taking place under conditions managers have never before faced - the need to downsize juxtaposed with the increasingly difficult task of recruiting new employees and retaining those who are already top performers. All this under the cloud of a now official recession and the events of September 11.
"For those of us who study management," Cappelli says, "it is a unique" convergence of challenges.
The 'Rank and Yank' Model
Chief among those challenges is talent management - a recognition that the best people in an organization have a significant impact on that organization's success. To put this issue in perspective, Cappelli asked his audience to focus on the worst employee they have, and then focus on their best employee. How much more valuable to the organization is the best employee vs. the worst employee, he asked.
The typical response, Cappelli says, is five to ten times better. And when you look at jobs where you can easily measure productivity - such as the amount of error-free code produced by computer programmers - the best programmer has been shown to be 22 times more effective than the average programmer.
Now consider how much the best employee is paid vs. the worst employee. The typical response is about 10-15% more. In other words, the performance differences are orders of magnitude bigger than the pay difference.
Why does this matter? "The ability of organizations to hire away your star workers" has increased significantly in the last few years, says Cappelli. "If somebody can come along and figure out who your best employees are, they could double their pay and still make out like bandits. So being able to find good people and keep them is a new phenomenon."
A brief word about those worst performers: what to do about them? In Jack Welch's latest book, Jack: Straight from the Gut, the former head of GE differentiates between the top 20% of employees, the bottom 10% and the middle 70%.
Anne-Birte Stensgaard, News Editor
