The writing is on the wall – there is a shortage of future leaders. The pool is smaller and more competitive. With the inevitable retirement of the baby boomers and a smaller population of younger workers entering the workforce, it is clear that a talent deficit is in the making. There are currently fewer leaders in middle management and below and even fewer who are ready to take on greater responsibility. Given the extent of rapid growth, shortage of capable workers, and change across industries, developing a talent pipeline is going to become the competitive edge in the future.

So…what can we do about it? For starters beef up your investment in identifying and developing talent. The American Society for Training and Development has reported annual spending of over $150 billion on employee learning in 2010 and 2011. This is evidence of the continued importance placed on learning and development. The challenge becomes whether companies are investing intelligently in the right talent. For example, companies who invest in a talent management framework aligned to their organization’s vision and goals will be making smart investments. This saves money in the long term as it reduces the costs associated with hiring the wrong people and retaining the right people.

Second, challenge assumptions on generational stereotypes. It is important to fight the current biases many have of younger generations: such as lack of loyalty to organizations, a sense of entitlement, and poor work ethic. Actually,nothing could be further from the truth. There are plenty of high energy, innovative, and driven individuals across generations who are looking for the right challenge and opportunity. By shifting away from stereotypes, organizations can focus on the positive: growing leaders and better challenging and engaging the workforce.

Third, focus on developing leaders who are reflective and self-aware of their impact on others. They are more likely to lead better and more likely to learn faster. It is widely recognized the number one reason people leave their jobs is because of their boss, not because of a better opportunity. Companies often promote based on technical expertise and competence rather than on leadership capabilities. This practice has been and will continue to be a mistake. Organizations need to determine what types of leaders are needed to reach the vision and begin a process of identifying and growing them internally.

Lastly, go back to the basics of leadership and create a culture that is supportive, team-oriented and open to learning.  Here are a few time-tested principles that promise to impact the engagement and loyalty of the younger workforce:

  1.  The father of Situational Leadership, Paul Hersey (“Doc”) had a very simple message: As a leader, be fair and consistent
  2. Invest in your team; talk with each one about their career interests and aspirations. Then map opportunities to their interests
  3. Find ways to empower employees and give some degree of autonomy
  4. Make the connection between the work and the impact on the bigger picture. People want to have a sense of purpose – this exists across all generations
  5. Give feedback, instill confidence, and accept failure as an opportunity to learn