Two years ago, McKinsey’s War for Talent study1 crystallized the struggle of US companies to find, train, and keep good employees. A recent McKinsey survey, buttressed by case studies and client work, focused on 5,000 computer science and electrical engineering graduates at top universities.
Fewer middle-aged people ...
The original report took its cue from a UN study projecting a 15 percent fall in the number of 35- to 44-year-olds by 2015. People who can fill technical jobs are in critically short supply: according to the US Bureau of Labor Statistics, one-tenth of the more demanding technical openings (such as those related to information technology and electrical engineering) already can’t be filled within the relevant time frame. (Exhibit 1)
... mean that finders must look further afield ...
Typically, both large and small companies have hired from big businesses, whose resources and training programs make them good sources of talent. At present, however, most employees no longer work for a big business—they have already left! (Exhibit 2)
... and employees aren’t keepers anyway ...
When companies, large and small, find qualified employees, they don’t stay for long. Half of those who graduated in the 1971-90 period left their first jobs within three to five years, and among those who graduated from 1991 to 1993, more than two-thirds did. Recent graduates receive, on average, 30 new offers a year.2 (Exhibit 3)
... so you have to show people the money
What to do? The survey shows that though new employees of a company care about its training opportunities and reputation almost as much as do colleagues who have been there for upward of ten years, new employees care much more than veteran ones about salaries and stock options. (Exhibit 4)
Evidence from McKinsey client work suggests that it would be smart to give new employees what they want. Profits at paper plants run by really good managers are 94 percent higher than average. More talented young investment bankers are over twice as productive as their less talented colleagues. Top-quartile software developers are worth 5 times as much as the average of all their colleagues, and top-quartile salespeople are worth 14 times the average. Indeed, it appears that a modest improvement in talent can double the market capitalization of a software company. 
About the Authors
Stuart Bodden is a consultant in the Houston office, Maurice Glucksman is a consultant in the London office, and Peter Lasky is a consultant in the New York office.
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