Strategy Dynamics Briefing 60: Competing for staff

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Competition for staff is widespread, not only in corporate settings but in non-profit and public sectors too. Rivalry for highly skilled and experienced people can be so ferocious that it is sometimes known as the ‘war for talent’. Less-skilled staff can be scarce too, so rivalry for employees concerns most organizations at some time. Type-1 rivalry to hire new staff and type-2, to persuade staff to switch from competitors, dominate this issue, since it is rare for staff to work for two or more employers at the same time, which be required for type-3 rivalry to apply.

Figure 1 shows two organizations wishing to grow a call center in a town with a total of 500 people who might ever be likely to work in a call center. We need to grow to 250 people within 12 months, and offer pay rates of $10/hour – high enough to motivate increasing numbers of people to consider working for us, so staff numbers start to rise.

After three months, a competitor starts a similar operation, also aiming to take on 250 staff by the end of the year. Since they need to grow faster, they offer pay rates of $11 per hour. This has three effects:

  1. the competitor stimulates people to start considering this employment opportunity at a faster rate (left of Figure 1)
  2. in a type-1 rivalry mechanism, they also start to capture the potential employees who were already considering working in our call center, but now have a better offer (bottom-center)
  3. in a type-2 process, the competitor starts taking people who are already working for us (right).

Figure 1: Rivalry with pay rates for new call center staff in a locality. (Click image to view larger)

Rivalry with pay rates for new call center staff in a locality.

If this were to continue (dashed lines), the competitor would nearly reach their goal, capturing 215 staff by the end of the year. Of these, about 30 will have been stolen directly from us and the rest both stimulated and captured from the ever-likely population. Halfway through the year, therefore, we raise our pay rates to $12. This stimulates still more people in the town to consider the job opportunities in call centers (the third peak on the chart of “new potential staff per month”) and nearly doubles the rate at which we can hire those potential staff. It also allows us to steal staff from our competitor, with the net flow of staff (right) reversing in our favor.

Naturally, other factors would feature in people’s decision to take job opportunities of this kind, such as working conditions and the recommendations of friends. However, these issues also operate by impacting on the flows of staff around this structure of type-1 and type-2 rivalry. There will also be people leaving employment in either of these organizations; in other words flowing out to the right of the structure, from where they may return to the potential population once more or leave the system altogether—in effect taking the view that they will not consider working in either call center again.

Until next time…

 

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Competition for experienced staff

One aerospace company had for decades hired only top-grade IT graduates from the best universities, offering the best starting salaries and the chance to work leading-edge software. But when skilled employees got a headhunter’s phone call offering a much higher salary in the banking industry, most individuals took the offer and left.

Strategic Management Dynamics book coverHowever, a few staff had not left — they had not even been called by head-hunters. Why not? The company had not always found all the top graduates it needed, so had taken on people with lower qualifications from second-tier universities. Yet these staff turned out to have great aptitude for the job that did not show up in paper qualifications. This group had been promoted more slowly than the ‘stars‘, so were somewhat older, with families and connections in the local community. The headhunters’ simple screening focused on university and degree criteria, so missed these people altogether. The company reduced its hiring criteria and starting salaries, but ended up keeping most of the IT specialists it needed. (Note, though, that like any solution discovered with dynamics principles, this one may or may not apply in other cases!)

This briefing summarises material from chapter 7 of Strategic Management Dynamics, pages 479-483.

Read more about the book on our website

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