Last night M Squared Consulting was honored as one of the Best Places to work in the Bay Area. This award program was sponsored by the San Francisco Business Times, Silicon Valley Business Journal, and the East Bay Business Times and garnered over 500 company applications.

What makes this award significant is that the “voters” are the employees of each company. In order to be considered we had to have an 85% participation rate in the survey which was sent to every employee. Each qualifying company was scored on a 100 point scale and the top 25 in each of several company size categories were ranked and awarded. (NOTE: We were in the 25 to 50 employee category.)

In our business (consulting) the talent we employ on our team and the consulting talent we deploy on client projects is our product. We have no greater asset than our human capital. By striving to be a “best place” to work, we send a signal to our employees that we value them and their contribution, we respect them as individuals, and we want to keep them happy. We also send a signal to our clients that we care deeply about our talent. It is no great secret that happy employees create happy clients.

When you consider the incredible costs and challenges with recruiting and retention (particularly with highly educated knowledge workers who are increasingly in short-supply and thus have many employment options) every employer must have a human capital strategy that insures they have the talent to execute.

I can think of no better human capital strategy than to strive to be a “best place” to work in your local market. It is certainly something our management team is invested in: our goal is to continually improve our employee value proposition just as we continually improve our client value proposition.

The backdrop to the various talent shortage factors I discussed in the last article is the rapidly evolving global economy. The free flow of capital and rapid pace of technology development is re-wiring world markets.

In this environment, fluid business models are rewarded and inflexible models are pummeled. Companies must remain flexible and must bring in the expertise they need, when they need it, in order to survive. By necessity the contingent workforce of just-in-time knowledge workers is going to grow in order to meet the impatient demands of this new talent marketplace.

So what’s the answer?

For talent seekers, those companies that must find and retain expertise, we are in for challenging times. The reality today is that many companies, especially in the major California markets, are struggling to hire and retain the talent they need to execute their designated growth plans.

Ultimately, the most innovative companies with the most compelling value propositions for talented workers will prevail in the war for talent.

For talent suppliers it is becoming more of a “sellers market.” This is not to say that finding consulting or full-time work is always going to be easy, or that you can simply name your price. But for knowledge workers who are truly experts, with proven skill-sets and track records of delivering results, there will be a continuing stream of opportunities for those savvy and energetic enough to find them.

All of these trends have significance for the consultants in our Consultant Network and for M Squared as a business. In short, we believe our business model will benefit from the talent shortage. Applying the supply and demand model, more business executives and professionals are making the lifestyle decision to become consultants, while more companies will turn to flexible providers of seasoned talent in order to execute on their strategic initiatives.

We are actively monitoring these trends and our local market conditions, and in upcoming issues of this blog will expand on many of these topics.

There are a number of factors to be considered when evaluating the talent shortage:

• The retirement of the Baby Boomers, perhaps the most highly educated and affluent generation in the history of the United States. The leading edge of the generation that was born between the years 1946 and 1964 is now hitting retirement age. This segment of the workforce has a large store of knowledge and experience, and often forms the core of senior management teams. As they retire from the workforce, the resulting “brain drain” risk is something that needs to be managed. Finally, to earn additional income in retirement or to simply stay engaged, some Boomers will choose to continue working in some limited capacity.
• Generations X and Y. The generations that follow the Baby Boomers are smaller in quantity, have different values, and also view work very differently. Not only are they the most technology-savvy group of workers, but for them work is a progressive series of project engagements and learning experiences. There is no expectation of a “job for life” nor is there an expectation of a single career.
• Increasing numbers of women in the workforce and more dual-income households are driving greater demands for work/family balance. The result is that many professionals are unable or unwilling to “put in the hours” as in times past.
• Tighter immigration and worker visa restrictions. Many highly educated foreign workers with in-demand skills are now restricted from working in the US. This trend is compounded by the rapidly expanding economies in their home countries which provides them with heretofore unavailable opportunity, and eliminates the need to look elsewhere for work opportunities. This “reverse brain drain” is predicted to have a dramatic effect on the global competitiveness of the United States.
• The United States is quite simply failing to educate enough technical and professional students to meet the market demand. Many of our current engineering and science graduates are foreign nationals who are returning to their homelands instead of staying here as was often the case in times past. In addition, countries like China and India are granting ten times the number of engineering and science degrees than the United States.
• Just as most workers no longer have an expectation of doing the same work for their whole career, most companies no longer expect to employ a worker for the entire career. The lack of job security and the relative lack of loyalty on both sides of the talent equation, have created a more challenging business environment in which to build teams and get work done.
• Local market conditions. For example, the extremely high cost of living in the major metropolitan areas of California (San Francisco Bay Area, Greater Los Angeles, Orange County, San Diego) is a compounding factor to recruiting and retaining the talent local companies need to grow.

In the next post I’ll share some initial thoughts on how we (as employers and employees) should react to this new paradigm.

“Between 1990 and 2025 the labor force growth rate will plummet from 11.9% a year to .2%, due to fewer entrants and Baby Boomers retiring. Jobs that will be in demand of workers will not just be low-skilled or low-wage jobs, but managerial, technical and professional positions.”

- The Future of Work Institute

“In the next five years, there will be a 6-million person gap between the supply and demand of knowledge workers in the U.S.”

- Employment Policy Institute

Over the past few years it has been common for HR professionals to talk about the impending talent shortage. It’s also been on our minds here at M Squared. Since our business is fueled by the talented people we employ in our staff positions and by the expert consultants who deliver project results for our clients, it is safe to say that we have our fingers on the pulse of the talent market! From this unique vantage point it is now clear that the talent shortage is very real. We are now in a war for talent!

While it would be easy to categorize the problem as one of economic supply and demand, that would be too simplistic a view. In reality the problem is more subtle, and much more far-reaching. While the workforce is not growing fast enough to meet overall demand, the problem is magnified by significant demographic trends that are changing the very nature of work, how it gets done, and by whom.

In the next post I’ll talk about a few of the major factors contributing to the talent shortage.

Today we officially launch the M Squared Consulting blog.

For the past 20 years M Squared has been at the leading edge of the “free-agent” economy. The company is truly a pioneer in the area of deploying independent senior level professionals on project or interim management engagements.

By way of introduction, let me answer the two most often asked questions about our business:

1. What do we do? - M Squared helps clients solve their critical business problems.
2. How do we do it? - We do this in a unique way: By combining the talents of our own people with those of our network of over 14,000 independent business consultants. We consultatively work with our clients to identify specific challenges and then provide the targeted expertise needed to solve them. Clients receive the right consultants at the right time for the right duration, without the rigid methodologies, protracted processes, and high costs associated with traditional consulting firms. Our active engagement management process ensures that we drive results. The team at M Squared successfully delivers over 500 engagements per year using this model.

This blog is a way for me to share our experiences and insights on consulting, the war for talent, and the rapidly evolving flexible workforce. Along the way I’ll also share our expertise, comment on industry developments, and highlight new strategies. Additionally, it will be a real-time medium for me to bring you up to speed on how our business evolves to meet the needs of our clients and consultants.

Once again, welcome to the M Squared blog. We look forward to having you join the dialogue.