The notion that labor shortages are a permanent face of the economy is so counter-intuitive that being slow to get it is completely understandable. There are no historical precedents for the current situation. As we all know, market prognosticators (and pundits in general) depend heavily on history for reassurance. In unprecedented shifts, information flows become corrupt and traditional sources lose their value.

The stock markets and there analysts, however, are not going to remain permanently blind.

As we've been saying for years, even if the economy grows at depression levels for the next decade (and that is very unlikely), the labor shortage will become so dramatic that it will cause changes in the fabric of our lives. The move to control the situation will result in the broad adoption of a Chief Technical Officer style role in most medium to large companies. Work weeks will expand. Definitions of career, loyalty, compensation, family, community, education, productivity and work itself will shift significantly.

As a result, companies providing services that attack the problem will ultimately become high flyers. The emergence of Information technology and the office of the CIO were at the root of the growth of EDS, the big five consulting shops and Computer Associates (among others). We have no difficulty imagining similar sized operations rooted in the solution to the labor shortage.

In HR circles, the attention is shifting to "retention" (recruiting your own people every day). While retention programs may stem attrition to something less than the 30% that plagues some large Silicon Valley firms, it's a Band-Aid that doesn't address the growth question. Certainly, retention coupled with acquisition can be used to slowly increase headcounts (and we expect a flurry of talent based acquisitions). Like pundits, you can depend on HR to dig in to history in the search for an answer.

In the long run, the question will be the acquisition and development of a real Human Asset Supply Chain. The metaphor itself is beyond the comprehension of most contemporary HR practitioners. The idea that people are really a capital asset to be cultivated for long term return, something that inventory managers get about the cans on a shelf, is going to emerge as slowly as the change in Wall Street's thinking.

But, it will emerge.

- John Sumser © TwoColorHat. All Rights Reserved.


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