StepStone The Cold War for Talent
The Cold War for Talent
About the research
StepStone commissioned the Economist Intelligence Unit to write this report on talent management. The report is based on an Economist Intelligence Unit survey of 484 senior executives, which was carried out in November and December 2008. 48% of respondents came from organisations with over US$1bn in annual revenue. Firms were spread across 19 sectors, with the largest proportion (21%) coming from financial services. 29% of respondents described one of their main functional roles as human resources. 34% were C-level executives, while a further 18% were directors, vice-presidents or senior executives. In addition, the Economist Intelligence Unit conducted a programme of interviews with senior executives and academics within the field of talent management.
Coverage
Executive summary
It has become fashionable to declare the “war for talent“ over. The logic has it that recessions bring cutbacks and redundancies, leading to a glut of people on the job market. Surely, if the same rationale applies to the current recession, when it comes to finding talent firms ought to find themselves in a buyer‘s market.
Not necessarily. The survey conducted for this report of over 480 senior executives within large global corporations shows that, despite the economic gloom, companies are paying close attention to their talent strategies. The findings indicate that the war for talent is not over; it is merely the nature of the battle that has changed. Companies are now embarking on what might be described as a “cold war for talent“.
While employers tighten their belts through redundancies, the need to fill key roles remains critical. In many developing markets, growth is expected to continue, albeit at a reduced rate. Consequently, competition to hire skilled employees remains fierce for local firms and multinationals alike, especially in Asia and Latin America.
The survey also uncovered significant concerns about the quality of many countries’ education systems, the deficiencies of which are stockpiling problems for the future. Much of Europe, the US and Russia appear particularly vulnerable. Such shortcomings risk blunting the impact of the recovery, when it comes, as employers focus their recruitment efforts where the talent pool is strongest.
If there is to be a flashpoint, it will be the battle of the human resources (HR) function to remain strategic to firms at a time when executives are so closely focused on the bottom line. What is more, if hiring talent becomes less about volume and more about targeting a few highly skilled individuals for specific roles, then it follows that the scope of HR could diminish. In truth, the situation is quite the reverse.
HR directors now have a great opportunity to demonstrate the strategic value of HR to the business. Not only must they help to deliver cost savings by identifying where staffing levels can be reduced, but they also need to do so in a way that minimises the impact of cutbacks on the business. At the same time, they must protect their employer‘s brand and maintain morale in the remaining workforce. The real bottom line is this: only HR can provide the link between the success of the business and the effectiveness of the people who work for it.
Companies are caught between implementing proactive and reactive strategies for the current economic slowdown:
Key findings from this research include the following:
Some 52% of respondents agree that the slowdown will mean either reducing staffing levels, or scaling back or freezing recruitment. However, 27% see this as an opportunity to target competitors‘ employees who have lost their jobs. There is strong evidence that labour shortages will continue, with 46% agreeing that recruiting and retaining talented employees is becoming more difficult, and a similar proportion (48%) identify a shortage of talent in their organisations. These tensions are fuelling the emerging “cold war for talent“.
Talent remains high on the agenda, but there is increasing pressure to demonstrate the results of investment in talent strategies:
Most executives say that talent management is becoming more important. But with scrutiny increasingly turning to companies‘ cost base, almost half (49%) of respondents to the survey say that the main barrier to implementing and maintaining talent management strategies is the difficulty in measuring the return on investment resulting from such policies and activities. This is up from just 20% of respondents last year.
The HR function faces a battle to make itself more relevant:
The majority (61%) of executives say that the people most responsible for talent management are outside HR, while less than half (47%) believe that the metrics used by HR departments to measure a firm‘s strengths and weaknesses are of value.
Two main strategies – graduate recruitment and internal redeployment – emerge:
Graduate recruitment is seen by executives as both critical to their organisation’s success and as a means of overcoming recruitment difficulties. Some 40% of respondents also say that additional training for current employees has helped them to fill talent gaps in the past year, while 58% cite career development as a critical factor in efforts to recruit and retain key employees. A similar proportion (54%) expect this to remain true in three years’ time. These strategies are often carried out against a backdrop of company-wide redundancies, making for a delicate balance.
Improving employee engagement and mobility, and the need to meet rising career expectations, remain challenges for organisations:
Most respondents (62%) say that employees’ increasing expectations of switching careers or jobs is the factor that is most likely to fuel talent shortages in their organisations in the next three years. This is particularly true in the Asia-Pacific region. However, benefits and packages are predicted to alter only slightly: around a quarter of respondents (24%) expect employees‘ salaries and benefits to remain the same over the next three years, and 40% see them as improving only moderately. HR therefore needs to work hard to maintain staff engagement.
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