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"The long line outside Philz Coffee in downtown Palo Alto is filled with hipsters and techies eager for the slowest made-to-order drip coffee in town. Most of them work for nearby tech companies like Palantir Technologies, SurveyMonkey, and MongoDB\u2014some of the hottest startups in the area. It\u2019s hard to tell by their uniform of T-shirts, hoodies, and jeans, but it\u2019s likely that this group of twenty- and thirtysomethings contains a sample of the most sought-after young professionals in the country. Above them, to the right of the door, is a sign that says PHILZ COFFEE: NOW HIRING ROCK STAR TALENT.\nWelcome to Silicon Valley, where employees (yes, that includes baristas at Philz) are not just employees\u2014they\u2019re rock stars. This is the land of luxurious perks (think massages, onsite haircuts, and free food) and high starting salaries. It\u2019s also a place where entrepreneurial dreams take flight\u2014there\u2019s always the potential, however slim the odds, of getting rich quick by working for a startup with a successful \u201Cexit.\u201D And it\u2019s not just the money and benefits that attract the rock stars. Out here young people feel they can make an impact\u2014a.k.a. change the way the world shops, banks, gets around, and accesses health care\u2014one algorithm at a time, which many young people value more than job security. As venture capitalist Marc Andreessen recently wrote in his blog, \u201CSilicon Valley isn\u2019t just a place\u2014it\u2019s a state of mind.\u201D\nSilicon Valley companies compete tooth and nail for top talent, but they\u2019ve had an advantage, since the Bay Area has become a mecca for some of the country\u2019s best and brightest. For years, graduates of elite universities like Harvard, Yale, and Cornell who once dreamed of working on Wall Street have flocked to the Valley, a trend that is only growing. Case in point: The percentage of Harvard Business School graduates who opted for jobs in the tech sector rose from 12% in 2012 to 18% in 2013, while the number of students who decided to start a career in finance dropped from 35% to 27%. And while once-scrappy Google, one of the jewels in Silicon Valley\u2019s crown, recently celebrated its 10-year anniversary as a public company, it remains a top choice among graduates. According to a recent survey from research firm Universum Global, engineering and business school students consistently rank Google as the company they most want to work for.\nTo compete, top banks like Goldman Sachs reportedly have upped their starting salaries and bonuses for interns. Other industries, like manufacturing and transportation, are also trying to find ways to attract young employees, especially as new skill sets like coding, creativity, and collaboration become increasingly important in a more global, digital, and fast-moving world. And that talent crunch only increases as more and more baby boomers exit the workforce. (According to the U.S. Census Bureau, by 2030 more than 20% of Americans are projected to be age 65 and over, compared with just 13% in 2010.) \u201CCEOs are just doing the math,\u201D says China Gorman, CEO of Great Place to Work, a San Francisco\u2013based human resources consulting and research firm. \u201CBaby boomers are leaving, and there aren\u2019t enough people coming in to fill their jobs.\u201D\nWhat\u2019s at stake? As market shifts and rapidly changing technologies transform businesses, companies that don\u2019t have up-to-date, evolving skill sets will fall behind. Hiring and retaining younger employees are more important than ever. \u201CCompanies that are able to hire, develop, and motivate the best people will have an obvious advantage,\u201D says Claudio Fern\u00E1ndez-Ar\u00E1oz, a senior adviser at global executive search firm Egon Zehnder.\nOf course, attracting a new generation takes more than beanbags and Ping-Pong tables (not to mention stock options). It can require a deeper shift in culture, including a more transparent leadership team and a constant effort to communicate values to current and prospective employees. And that\u2014in addition to robust internship programs and other recruiting tools\u2014is something Silicon Valley companies have gotten right.\nIronically, while the dearth of skilled talent will get only worse, across-the-board unemployment remains relatively high. \u201CThe paradox is profound,\u201D says a recent report on global talent from Oxford Economics, an economic forecasting firm. \u201COn the one hand, 40 million workers in the industrialized world are unemployed\u2026Yet executives and managers tasked with hiring new workers often say they are unable to find the right people with the proper skills to fill their vacancies.\u201D\nSilicon Valley is also feeling the talent crunch. Ask any technology CEO what his or her biggest challenge is, and the answer will probably be finding and hiring talent. (That\u2019s at least partly why the latest \u201Ctrend\u201D in the Valley is doing more outreach to prospective female and minority employees, not to mention hiring developers without the usual credentials.) And yet there\u2019s a lot to be learned from them. Because if there\u2019s one thing the tech sector gets, it\u2019s that people\u2014more than any other resource\u2014are a company\u2019s most valuable asset.\nThe Global Talent Crunch Over the next decade, it is estimated that the growth in demand for college-educated talent will exceed the growth in supply for most of the developed world. India&amp;#8217;s educated workforce is growing 2% annually, while America&amp;#8217;s is shrinking 0.8% each year.Graphic Source: Oxford Economics\nFrench-born Aurelia Setton is one of those rock-star employees you often hear about in Silicon Valley. She graduated from the HEC School of Management, one of the top business schools in Paris, back in 2002, and later made her way to the Bay Area. After a stint in the Napa Valley wine industry, Setton got into Stanford University\u2019s MBA program, during which she landed a product-marketing internship at Apple.\n\u201CI did the internship there because I wanted to work for the top American technology company,\u201D says Setton, 35. One day she bumped into then-CEO Steve Jobs in an elevator at the Apple campus in Cupertino. The commanding chief executive officer stood right by Setton, who knew she had about 10 seconds to say something before he stepped out.\n\u201CI told him I was an intern and would soon be going to China to work on the Beijing Olympics campaign,\u201D says Setton (the year was 2007). \u201CHe turned around and said, \u2018I can\u2019t believe we\u2019re sending interns to China.\u2019\u201D\nRegardless of how Jobs might have felt about giving interns such responsibilities, in Setton\u2019s case the experience was invaluable. She later went to work for a startup in the energy field, because, she says, \u201CI found energy and the environment to be something I really believed in.\u201D After a few years she switched to the networking site LinkedIn. \u201CIt was a company that had a strong mission and strong brand.\u201D\nAfter about a year and a half working as a global sales manager for LinkedIn, Setton made another career move, accepting an offer to become a senior director at enterprise-software maker Medallia, based in Palo Alto.\n\u201CIt always starts with alignment with the vision,\u201D Setton says of her career moves. \u201CIt\u2019s about having an impact and changing the world. My changes were always driven by companies whose mission I felt socially aligned with.\u201D\nSetton\u2019s career trajectory is a perfect example of several new phenomena in today\u2019s workforce. Her flexibility to switch between jobs and industries might make some employers see her as disloyal (a common complaint about millennials), but that chameleon-like ability to change every few years also means she can adopt new skills as her employers adapt to a rapidly changing, increasingly technology-driven and global corporate world. (Jobs didn\u2019t know it, but one of the reasons Apple sent her to Beijing is that Setton studied Mandarin.)\nAt LinkedIn, one of Setton\u2019s former employers, the acknowledgment that employees won\u2019t stay with the company forever starts before they even join and isn\u2019t perceived as a negative. Kevin Scott, senior vice president of engineering at the company, based in Mountain View, asks an important question of every candidate he interviews: \u201CWhat job do you want after you work at LinkedIn?\u201D\n\u201CPart of the reason Silicon Valley companies are so successful is that they\u2019re a recombination of people who have worked in multiple companies,\u201D says Reid Hoffman, co-founder of LinkedIn and co-author of a new book called The Alliance: Managing Talent in the Networked Age.\n\u201CHistorically, most companies don\u2019t want to ask that question,\u201D says Ben Casnocha, an entrepreneur who co-authored the book with Hoffman. \u201CBut today your best people are not going to be lifers.\u201D\nFor Setton, the pace of change and acquiring new skills come naturally\u2014both in her personal and professional world. So does the need to believe in what her employer of choice does in the world.\nThat is something many tech companies got early on, perhaps because they were started by young people with aspirations similar to those of the employees they\u2019re hiring. Google\u2019s idealistic corporate slogan has always been \u201CDon\u2019t be evil.\u201D Facebook\u2019s mission is to \u201Cmake the world more open and connected.\u201D Twitter\u2019s? To give everyone the \u201Cpower to create and share ideas and information instantly, without barriers.\u201D Even Philz Coffee has a mission: \u201CTo better people\u2019s day.\u201D\nA recent article by Ravin Jesuthasan, global head of talent management at consulting firm Towers Watson, advises insurance companies on new means of attracting skilled workers. \u201COne way insurers can attract workers is by underscoring the positive role risk management plays in modern society\u2014the good it can actually do for individuals, groups, companies, even countries,\u201D writes Jesuthasan.\nHaving a mission that resonates not just with customers but with employees can go a long way toward attracting younger workers, and not just in technology or insurance. Whole Foods Market, for example, has also been able to attract top talent, not only because of its higher-than-average wages and stock options, but also because it has a compelling mission statement: \u201COur vision reaches beyond food retailing. In fact, our deepest purpose as an organization is helping support the health, well-being, and healing of both people\u2014customers, team members, and business organizations in general\u2014and the planet.\u201D\nOf course, while having an effectively communicated higher purpose is key to getting prospective employees\u2019 attention, actually getting young workers in the door requires a bit more work.\nTech companies compete fiercely to recruit on college campuses and at job fairs. And increasingly, like Square, they are turning to high schoolers to fill the talent gap. Facebook now recruits teen interns before their freshman year of college, and LinkedIn, which has hired 300 interns this year alone, has opened its summer program to high school students. Airbnb, meanwhile, has brought in interns as young as 16.\nIn the Valley interns are usually expected to write code, come up with ideas, and produce work just as any other employee would. \u201CInterns are very important\u2014they really are our lifeblood,\u201D says Miranda Kalinowski, head of global recruiting at Facebook. \u201CThey do actual work\u2014things that help us become more open and connected.\u201D\nSome tech companies outside the Valley get the need to expand too, and are opening internship programs to military veterans. Charles Phillips, CEO of the New York\u2013based enterprise-software maker Infor, plans to hire close to 100 interns this year and says some of those spots will be reserved for veterans. He also says he is open to recruiting developers and designers who don\u2019t have college degrees. Phillips, a former Marine, says, \u201CThere are plenty of talented people who didn\u2019t go to school.\u201D\nIn fact, if or where candidates went to college isn\u2019t necessarily indicative of how successful they will be within a company, says Vivienne Ming, VP of research and insight at Gild, a San Francisco\u2013based startup that applies big-data tools to finding and placing developers. An increasing number of tech companies now sell \u201Cpeople analytics\u201D tools for use in hiring.\nExpanding the pool of candidates also means accommodating employees who would have normally opted for working independently or outside the office. That\u2019s why Santa Clara\u2013based Intel, an older tech company, is experimenting with different work arrangements for entrepreneurial employees or those who want to spend more time with family.\n\u201CThe workforce of today is very different from the workforce of a decade ago,\u201D says Zahir Ladhani, VP of IBM\u2019s Smarter Workforce division, which makes HR analytics tools. \u201CEmployees expect greater flexibility.\u201D\nOutreach and hiring are challenges, but so is retention. That\u2019s partly why, once an intern\u2014or any employee\u2014has been hired, many Silicon Valley companies require weeks-long training. Facebook, whose engineering boot camp is a six-week program for new hires to learn its code base and culture, has created boot camps for other types of employees\u2014from data scientists to sales and marketing. Apple University, set up in 2008 by Jobs, indoctrinates new employees to Apple\u2019s approach to product design and other cultural elements. It\u2019s also a way for Apple to integrate new employees after acquisitions, like the recent $3 billion purchase of headphone company Beats.\nNot every company will be able to emulate Google\u2014or Facebook or Square or Twitter, for that matter. Nor should it. But CEOs who are able to come up with their own twist on \u201CGoogleyness\u201D\u2014whether through internships, training programs, flexible hiring processes, or transparency with employees\u2014will probably have an easier time attracting rock stars.\nThis story is from the September 22, 2014 issue of Fortune."^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2014/09/04/the-global-talent-crunch/>