There's a talent drain coming, but companies willing to look at nontraditional candidates will find all the qualified folks they need

Kurt Ronn

Smart companies need to plan now for the retirement of the baby boomers, because it is anticipated that approximately half of current senior executives will exit the workforce within the next five years. Will there be available talent to fill the vacancies—either from internal promotions or outside recruitment?

The reality is that there is no deep supply of well-qualified workers waiting in the wings for promotion to senior jobs. Organizations today are running with lean, highly productive staffs. While such streamlining is great for budgets, the fact that workplace productivity levels have continued their upward trajectory has created a dearth of available talent.

Losing multiple key executives within a short time can tear a hole in the business plan and hurt both a company's bottom line and stock price. Thus, now is the time to formulate a plan. If your company delays, you risk losing out to your competition.

Look for Promotion Potential

Addressing the problem of a shrinking workforce requires sophisticated solutions for both recruiting new talent and working with existing talent. Companies need to embrace diversity, broaden the pool to include nontraditional candidates, and maximize existing talent while also training and integrating new talent into the organization.

By anticipating the talent drain and taking action, companies have an excellent opportunity to bolster their current teams with greater diversity of race, ethnicity, and gender matched to market demographics. They should hire mid-level managers with competitive knowledge and leadership for integration within the organization now to provide potential sources for promotion later.

Where should companies find this diverse group of talented people with appropriate knowledge and experience? Companies should be careful not to try to replicate the current senior team. Instead, they should consider creating a "new team" made up of internal promotions and a few hires from competitors, with the majority coming from outside the industry—and outside the hiring company's comfort zone.

Leadership Training is a Must

The pool of available candidates increases tremendously when the company redefines the scope of responsibility for the position as well as expands the list of peripheral industries from which potential candidates can be culled. Consider that increased diversity—of race, gender, and experience—can strengthen the company's knowledge bank and fuel future growth.

For instance, the 2000 U.S. Census reported that Hispanics represent 6.8% of the wholesale and retail buying population. Suppose you are an apparel retailer. It could be reasonable to want 6.8% (or more, considering the potential growth of the Hispanic marketplace) of your organization to have Hispanic buyers.

Traditionally, companies develop talent from within and hire talent from their competitors within the industry. However, there aren't enough Hispanic retail and wholesale buyers available from the competition to help you reach 6.8%. But think about the fact that retail grocery and ethnic foods are a key market sector for Hispanics. Therefore, you would be wise to consider ethnic-food buyers as people to hire.

There's No Time to Waste

With this approach, however, leadership training becomes part of the price for filling the position. Most companies have a training budget for entry-level hires. But a leadership-training program to groom mid-level managers—from both inside and outside the company—for senior executive positions is a worthwhile investment. Leadership training programs are typically 12- to 24-month rotational programs that teach middle management both functional and operational responsibilities.

The advantage of such leadership/training programs is that they enable a company to hire beyond the traditional recruitment specifications and broaden the pool of candidates available for promotion. And one-time fixes are short-sighted. To really have an impact, leadership development must become a part of a company's organizational fabric. The company has to be in the education and training business if it hopes to retain talent. Establishing ongoing leadership/training programs will not only ease new-hire transition/assimilation but also help ensure the growth of future talent, whether homegrown or culled from outside the company.

The solution, then, is to act now. Evaluate your current team. Identify the holes and the available pool of qualified talent. Determine the core competencies you will need, and consider where you will find diverse talent. Build a leadership program to bring the talent on board, and fund the program for success. Then recruit the best talent in the market.

Remember that the effort involved in building the new team won't be as painful as doing nothing. And the result will be a diverse team of highly skilled leaders and a solid pipeline of talent for the future. Given today's tight labor market, the new team will be your competitive advantage.

View original publication online at BusinessWeek.com