By Wim van Acker with Sherry Muir Irwin
April 16, 2009
There are three parties at fault for the current economic crisis: the government which doubled our country’s debt to $ 10.5 trillion over the past eight years, companies which took too much risk and the public which spent too much money it did not own.
The economic crisis is currently hitting hard, due to a decreasing GDP and a growing debt. U.S. GDP is expected to decrease by 2.8 percent in 2009. The public debt of currently 61 percent of annual GDP is on its way to rise to 80 percent in the next decade. Therefore, the government should focus on maximizing the quality of its spending, which means achieving lasting effects such as improvements of infrastructure and increasing energy independence. This will lead to different levels of growth opportunities in selected sectors, with above-average job opportunities in building roads and bridges, building wind turbines, solar farms, waste incineration equipment, power transmission lines, to name a few.
As mentioned before, part of the economic problem has been caused by companies. It is too early to fully understand the root causes of this part of the economic crisis, but on a 30,000 feet level they are twofold: short-term profit maximizing prevailing over responsible longer term risk management by executive management and lack of oversight by non-executive management (Board of Directors). Lack of understanding of the risks made the situation spin out of control.
Many companies have reduced their staff levels significantly and recruiting is at a low level. However, it is expected to pick up significantly over the next months, first of all due to people retiring, leaving their company to join a competitor or transitioning to an entirely new industry. In addition, competition to secure talent for the 782,000 jobs which the government intends to create in the Midwest over the next two years - of which 109,000 will be in Michigan - will drive recruiting. The question arises which skills will be most in demand and does this represent a change compared to past years?
In order to ensure long term competitiveness of their companies, executive management will need to adopt a longer term view to better manage risk and to achieve sustainable competitiveness. Therefore, skills like strategic orientation and focus on profit and sustainability are going to be in strong demand.
In order to better protect stakeholders’ (shareholders, employees, customers, suppliers) interests, Boards of Directors should become more involved in the business. By doing so, members of the Board of Directors will be better able to ask management-focused, critical questions which will serve as both support of, and challenge to, executive management.
Where do we get the right talent from now on? Due to the shift in required skills in the direction of being more critical, the best candidates will not necessarily be those who know the company the best. Highly qualified candidates should be pursued at other companies, and even in other industries, provided there are sufficient similarities and comparable risk profiles.
Wim van Acker and Sherry Muir Irwin are partners with The Hunter Group, LLC, an international executive search firm based in Bloomfield Hills, Mich. Wim may be reached at [email protected]. Sherry may be reached at [email protected].
